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The software giant said the boost came from strong personal computer sales and spending related to making computers millennium compliant.

Microsoft said it earned $1.98bn (£1.2bn), or 73 cents per diluted share, in the quarter, up from $1.13bn, or 42 cents a share, a year earlier.

Revenues were 38% higher at $4.94bn compared with $3.59bn last time.

The results were announced after the US market had closed for the day, but Microsoft shares finished up 5 15/16 at 155 11/16.

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The figures went far beyond the rosiest of industry forecasts. On average, Wall Street analysts estimated that Microsoft would earn 59 cents a share in the second quarter to 31 December. The most optimistic estimates were for 61 cents a share.

The company has exceeded analysts' expectations by at least a penny a share for at least 27 straight quarters, dating back to 1992.

Outlook still 'uncertain'

Despite the strong figures, Microsoft chief financial officer Greg Maffei said the company remained "guarded" about growth in 1999 because of the uncertain international economic outlook and an expected fall in spending on technology not related to solving Year 2000 problems.

He said demand was strong for Microsoft's core products, including the high-end Windows NT family of systems and Office 97 business applications. The company said it had licensed some 25m units of its Windows NT Workstation, including more than 3m new users in the last quarter.

Good day for profits

Microsoft's profits announcement crowned a good day for corporate earnings on Wall Street.

A raft of large US corporations reported earnings mostly above last year's by more than 10%, and exceeded expectations that have been scaled back over the last few months because of international economic turmoil.

By mid-afternoon, 36 companies in the Standard & Poor's 500 stock index had reported earnings, boosting the total so far this season to 101.

Of the 36, 19 exceeded Wall Street expectations and 12 matched consensus forecasts. Only five were short of expectations.