Microsoft Corp. bucked a recent trend among major sellers of technology to corporations, posting double-digit percentage increases in both revenue and profit.
The report showed Microsoft using robust sales to businesses to offset declining sales of personal computers to consumers. Microsoft shares rose 6.7% in after-hours trading.
"You view it as a victory this quarter given what we've seen as the malaise across tech," said Daniel Ives, an analyst with FBR Capital Markets & Co.
For the first fiscal quarter, ended Sept. 30, Microsoft said revenue from software and other services sold to corporations—which generate roughly two-thirds of Microsoft's gross profit—increased 10% compared with the same period a year earlier.
Microsoft said its "cloud," or Web-friendly, business sales more than doubled, though they remain a small slice of overall revenue. The advances in the cloud were led by Office 365, a new version of the familiar workplace software that Microsoft has refashioned to run online. Revenue from a trio of established software products, including the Exchange corporate email service, rose by a double-digit percentage, Microsoft said.
"It was a great start to the fiscal year," Amy Hood, Microsoft's chief financial officer, said in a conference call with analysts Thursday.
Microsoft had less success selling to consumers, but even those sales improved from prior quarters. Revenue from products and services sold to consumers, which include PCs and the company's Surface tablet and Xbox videogame systems, rose 4%. Microsoft said it sold more than twice as many Surface devices than it did the prior quarter—an important development for a product that had a rocky sales start.
Consumer-division revenue rose despite a 7% slump of Windows software sales for consumer PCs, and a 23% slump in Office sales to consumers.
Overall, Microsoft posted net income of $5.2 billion, or 62 cents a share, compared with net income of $4.5 billion, or 53 cents a share in the same period a year earlier. Analysts had expected earnings of 54 cents a share, excluding some items; on that basis, Microsoft's earnings in the latest period were 63 cents.
Revenue surged 15.7% to $18.5 billion, well exceeding analysts' expectations of $17.8 billion.
Microsoft still faces big challenges in new computing areas including the Web, tablets and smartphones. Adapting the company to those changes soon will fall to a new leader. Steve Ballmer, Microsoft's CEO since 2000, announced in August he plans to retire within a year. The company offered no update on the search for a successor.
Ms. Hood said she was proud of employees for staying focused amid the distractions of Mr. Ballmer's retirement, a corporate reorganization announced this summer and other developments.
Microsoft is trying to diversify its business away from PCs and computer servers, but the shift isn't easy. Microsoft's Windows operating system, the backbone of more than 90% of the world's computers, gave the company a foothold to sell more of its software. Including tablet computers and smartphones, however, Microsoft software powers roughly only 15% of the world's computing devices, according to research firm Gartner.
PC sales have fallen year-over-year for six consecutive quarters, including a 7.6% decline in the three months ended Sept. 30, according to research firm IDC. Ms. Hood said, however, "the general PC market turned out better than we expected," particularly in developed markets. Intel Corp., which makes most of the chips that power Windows computers, likewise said in recent weeks that it saw improvements in the PC market after the long industrywide sales slump.
Write to Shira Ovide at shira.ovide@wsj.com
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