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Microsoft Surface gains at Apple iPad's expense

Microsoft says sales of its tablets surged 38 percent year over year in the company's first quarter.

Things are looking up for Microsoft's Surface.

The Redmond, Washington-based tech giant reported that sales of its tablets surged 38 percent in the first quarter compared with the same period a year ago. The company credited strong sales of its Surface Book and the Surface Pro 4 with generating $926 million in revenue during the quarter, up from $672 million a year ago. Microsoft did not reveal total unit sales.

While Apple's share of the tablet market eclipses that held by Microsoft, the increase in Surface sales comes as Apple grapples with how to turn around declining iPad sales. Apple reported in July that revenue from the iPad rose 7.4 percent in the third quarter but unit sales dropped 9 percent to 9.95 million -- the 10th straight down quarter for iPad sales.

Apple will reveal its fiscal fourth-quarter earnings Tuesday. Analysts expect the company to report sales of 9.1 million iPads during the last quarter. The Street expects iPad revenue to rise 1.3 percent this quarter to $4.3 billion.

Overall, Microsoft reported revenue of $22.33 billion, beating a Wall Street estimate of $21.71 billion, according to a Thomson Reuters consensus estimate. Its stock was up 5.5 percent in after-hours trading.