Microsoft revenue rose in the second fiscal quarter, while its profits dipped.
Revenue for the quarter, ended Dec. 31, hit $20.89 billion, up 5 percent compared with 2010's second fiscal quarter, which included recognition of $224 million of deferred revenue related to the Office 2010 technology guarantee program.
Net income came in at $6.62 billion, or $0.78 per share, down from $6.63 billion, or $0.77 per share.
CEO Steve Ballmer called the results "solid" in a statement and predicted that business will accelerate in the new fiscal year starting in July as a result of upcoming product and service launches.
Microsoft missed on the consensus revenue expectation of $20.93 billion from financial analysts polled by Thomson Reuters, but exceeded their earnings per share forecast of $0.76.
The company's Business Division generated $6.28 billion in revenue, up 3 percent year-on-year, and up 7 percent excluding the Office 2010 recognition of deferred revenue. Almost 200 million licenses of Office 2010 have been sold since its launch 18 months ago, the company said. Exchange and SharePoint revenue grew 10 percent, while revenue from Lync and Dynamics CRM grew more than 30 percent.
The Server & Tools business had $4.77 billion in revenue, up 11 percent, and was helped by "double-digit revenue growth" from Windows Server and SQL Server premium editions and by more than 20 percent growth in System Center revenue.
Revenue shrank 6 percent at the Windows & Windows Live Division to $4.74 billion. More than 525 million Windows 7 licenses have been sold since its launch.
The Online Services Division's revenue grew 10 percent to $784 million, while the Entertainment & Devices Division had revenue of $4.24 billion, up 15 percent. There are now about 66 million Xbox 360 consoles in the market, along with 18 million Kinect sensors. Xbox Live memberships increased 33 percent to 40 million.
Looking ahead, Microsoft is revising downward its operating expense guidance to a range of between $28.5 billion and $28.9 billion for the full year ending June 30.