Vista, Office Spur Microsoft to Huge Growth

Microsoft yesterday reported a 23% leap in net income and its best revenue growth since the dot-com boom, making it an isolated winner in a tumbling market. The announcement drove up the company's shares 10% in after-hours trading. The sales of new PCs with Windows installed helped drive the gains, especially in developing countries creating large new markets for computers.

Although Windows Vista earned less than rave reviews, demand for it and Office remain strong—quarterly sales in the Window division jumped 27%. Microsoft still lags far behind Google and other Internet companies in growth from online advertising, and it faces a long-term threat as Internet services that emulate some of the functions of Office threaten to woo software customers away. (More Microsoft stories.)