Microsoft expects 51% rise in profits to be sustained

Software giant Microsoft has reported a 51 per cent rise in quarterly profits amid signs of a recovery in technology spending by big businesses.

Microsoft said an increase in sales to companies of the newest versions of its Windows operating system and Office software helped to make up for softer-than-expected revenues from sales of consumer PCs in the quarter.

For the first quarter of its financial year, Microsoft's net income rose 51 per cent to $5.4 billion (3.4bn), while revenues improved 25 per cent to $16.2bn (10.2bn). Microsoft beat expectations on both fronts.

Bill Koefoed, Microsoft's general manager of investors relations, said the pick up in business spending coincided with recent product launches.

He added: "We ended up in this great sweet spot in business spending that was re-emerging after the downturn."

Koefoed expects the spending to continue for some time as companies are using more than 400 million PCs that are more than four years old.

Meanwhile, Microsoft's online revenues, which come mainly from search advertising, rose 8 per cent to $527m (332m).

The segment widened its operating loss in the quarter to $560m (352.8m) as the company continued to spend money competing with Google, the sector's leading search provider.

Microsoft's comments about weaker consumer demand for PCs was in line with those by other technology firms.