Microsoft posts strong quarterly profits, Ballmer credits devices and services

"Our devices and services transformation is progressing and we are launching a wide range of compelling products and experiences this fall for both business and consumers," said chief executive Steve Ballmer.

In the company's first fiscal quarter, the profit translated to 63 cents a share, better than expected, and revenues were also ahead of forecasts, up seven percent at $18.6 billion.

Ballmer said Microsoft was "seeing lots of consumer excitement for Xbox One, Surface 2 and Surface Pro 2, and the full spectrum of Windows 8.1 and Windows Phone devices."

The company recently upgraded its Surface tablets, after taking an embarrassing $900 million writedown earlier this year due to weak sales.

Microsoft, which dominates the personal computer market with Windows and has a strong following with its Xbox consoles, is struggling to adapt to mobile computing, dominated by Apple and Google software platforms.

The company said Windows revenues fell seven percent in the quarter despite gains in "Windows Pro" software.

It said revenues from Surface "grew to $400 million with sequential growth in revenue and units sold over the prior quarter."

But the company provided no detailed sales figures for Surface, which analysts say has had little impact in the fast-growing tablet market.

Microsoft shares leapt 5.6 percent in after-hours trade to $35.60 on the stronger-than-expected results.

Jon Ogg at 24/7 Wall Street said Microsoft delivered a "huge earnings surprise," adding: "hat is interesting is how many people still say its future is dead, yet here it is."

The company said it deferred the recording of $113 million from its upgraded Windows 8.1 operating system.

The earnings come with Microsoft amid a major transition, seeking to catch up in mobile computing as it searches for a new CEO to replace the departing Ballmer. Microsoft has also announced it is buying the handset division of Finland's Nokia to boost its efforts in smartphones.

Overall revenues for in its Devices and Consumer division grew four percent to $7.46 billion. That was helped by a 47 percent jump in search advertising revenue, "driven by an increase in revenue per search and volume."

Commercial revenue, which includes its server division, rose 10 percent to $11.20 billion.