Microsoft Corp lifted its full-year estimates on Thursday after posting a 23 percent rise in quarterly profit on strong demand for both computers running its operating system and Halo 3, sending its shares up 12 percent.
The world's largest software maker beat even Wall Street's most bullish forecast with a net profit of $4.29 billion, or 45 cents per diluted share, in its fiscal first quarter, up from $3.48 billion, or 35 cents per diluted share, a year earlier.
Revenue rose 27 percent to $13.76 billion in the three months ended September 30.
Analysts, on average, had forecast 39 cents per share in profit with estimates ranging from 38 cents to 40 cents per share on revenue of $12.54 billion, according to Reuters Estimates.
It was a huge beat. The guidance I think is pretty good for the year, said Jane Snorek, a senior analyst at First American Funds. This is going to be good for the tech sector.
Shares of Microsoft, already up 10 percent in the last month, surged another 11.7 percent to $35.73 in after-hours trade from their Nasdaq close of $31.99.
Market research firms Gartner and IDC said global personal computer shipments rose about 15 percent in the September quarter, which helped Microsoft as well as the quarterly results of chip maker Intel Corp.
Microsoft also enjoyed strong sales of Halo 3, the latest installment of its flagship shooter franchise. The blockbuster game title racked up more than $300 million in its first week of sales after its September 25 debut.
Consumers also bought Xbox 360 consoles to play the game, vaulting Microsoft's game machine past rivals in September.
Microsoft raised full-year earnings estimates to a range of $1.78 to $1.81 per share from a previous range of $1.69 to $1.73. It also raised its full-year revenue estimate range by almost $2 billion, to $58.8 billion to $59.7 billion.
Wall Street analysts, on average, were forecasting fiscal 2008 earnings of $1.73 per share on revenue of $57.3 billion.
For the current quarter, Microsoft forecast earnings in a range of 44 cents to 46 cents per diluted share on revenue of $15.6 billion to $16.1 billion.
Analysts, on average, were forecasting earnings per share of 44 cents a share on revenue of $15.5 billion in Microsoft's fiscal second quarter, according to Reuters Estimates.
The holiday quarter is a crucial one for Microsoft as it aims to spur adoption of new computers running its latest Windows Vista operating system. Its entertainment arm also counts on the December quarter generating twice as much revenue as any other quarter of the year.
Microsoft is going to have a fabulous (fiscal) second quarter. Worldwide PC demand is still very strong and is going to benefit Windows and Office, said Toan Tran, analyst at Morningstar. With the holiday season, we're going to have demand for Xbox 360, and for 'Halo 3.'
(Additional reporting by Ritsuko Ando and Lisa Baertlein)