By Adam E. John

Microsoft recorded first-quarter revenues of $17.37 billion for the quarter ended Sept. 30, 2011, a 7 per cent increase from the same period of the prior year. Operating income, net income, and diluted earnings per share for the quarter were $7.20 billion, $5.74 billion, and 68 cents per share, which represented increases of 1 per cent, 6 per cent, and 10 per cent, respectively, when compared with the prior year period.

Since July, Microsoft reported a number of product and business highlights, including:

Microsoft Business Division: The Microsoft Business Division reported $5.62 billion in first quarter revenue, an 8 per cent increase from the prior year period which included the launch of Office 2010. Revenue from Microsoft’s productivity server offerings – including Lync, SharePoint, and Exchange – grew double-digits, and the Dynamics business grew 17 per cent in the quarter.

Server & Tools: The Server & Tools segment posted $4.25 billion in first quarter revenue, a 10 per cent increase over the prior year period and the sixth consecutive quarter of double-digit revenue growth. Microsoft also unveiled a developer preview of Windows Server 8.

Windows and Windows Live Division: Windows and Windows Live Division revenue was $4.87 billion, a 2 per cent increase over the prior period, in line with the PC market. Windows 7 sold 450 million licenses since launch.

Bing: Bing’s organic US market share grew 350 basis points year over year to 14.7 per cent while Bing-powered US market share, including Yahoo properties, was approximately 27 per cent.

Xbox: Xbox was the top-selling gaming console in the US for the ninth consecutive month. The company launched the Gears of War 3 game with over three million copies sold in the first week, and announced plans to roll out the next generation of TV entertainment on Xbox LIVE with nearly 40 content providers starting this holiday season.

Business Outlook: Beginning in the second fiscal quarter, Microsoft’s results will include the results of Skype. The company offers updated fiscal 2012 operating expense guidance, including Skype and the associated acquisition-related expenses, of $28.6 billion to $29.2 billion.

Peter Klein (Chief financial officer, Microsoft): We saw customer demand across the breadth of our products.

(Adam E. John is consulting editor with He can be reached at [email protected])