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Microsoft's first quarter: A blowout

The software maker said it got off to a fast start in the first quarter, with revenue up 27 percent from a year ago.

Updated 2:00 p.m.

Microsoft reported a strong jump in first quarter revenue and earnings on Thursday, as the company benefited from Windows Vista and the launch of Halo 3.

The software maker said it took in $4.29 billion in profits, or 45 cents per share, on revenue of $13.76 billion for the three months ending September 30. As for Vista, the company said it saw double-digit growth in multi-year agreements by businesses and saw "the vast majority" of consumers opting for a premium version of the operating system.

"This fiscal year is off to an outstanding start with the fastest revenue growth of any first quarter since 1999," CFO Chris Liddell said in a statement. "Operating income growth of over 30 percent also reflects our ability to translate revenue into profits while making strategic investments for the future."

For the current quarter, Microsoft said that its revenue is expected to be in the range of $15.6 billion to $16.1 billion, with per-share earnings of 44 cents to 46 cents. For the full fiscal year, Microsoft said to expect revenue in the range of $58.8 billion to $59.7 billion, with per-share earnings of around $1.78 to $1.81.

Update: In an interview, Microsoft investor relations general manager Colleen Healy noted that the company has lifted its revenue guidance for the year by more than $2 billion as the company has seen positive reactions to the products introduced in the past nine months.

"It's fantastic to see these products are off to a good start... because they will have a multi-year impact," Healy said.

Microsoft saw particularly strong results in the Windows client business, where revenue grew 25 percent in the quarter. That was aided by overall strong PC sales as well as gains the company made in reducing piracy rates. Healy said that reduction in piracy rates accounted for about 5 percentage points of the the growth.

Buoyed by the launch of Halo 3, Microsoft saw a 90 percent increase in revenue for its Entertainment and Devices unit, which also swung to profitability in the quarter. Healy said that Microsoft sold 1.8 million Xbox 360 consoles in the quarter, but declined to give a forecast for the holiday quarter, citing competitive concerns. The company is still aiming to have the unit profitable for the full fiscal year, Healy said.