Sales of Windows Vista have helped Microsoft post a forecast-beating 65% rise in third-quarter profits.
Vista and the latest Office software boosted sales at Microsoft
The world's largest software maker said net profit in the three months to 31 March was $4.93bn (£2.47bn) or 50 cents per share, up from $2.98bn last year.
Analysts had forecast a profit of 46 cents per share.
Between $1bn to $1.7bn in Vista sales had been deferred to the firm's third-quarter to account for discounted upgrades given to PC buyers.
Shares in Microsoft rose 5% to $30.48 after electronic trading had closed, signalling that further rises are likely when Wall Street opens for business on Friday.
"There was a lot of concern in the marketplace over Microsoft's 2008 outlook," said Andy Miedler, a technology analyst at Edward Jones.
"We think this forecast should allay these concerns."
The software powerhouse started selling its latest operating system, Vista - its first major update since Windows XP was introduced five years ago - to consumers at the end of January after repeated set backs.
Microsoft's new Office software was also launched in January to coincide with the delayed start date for Vista.
Shoppers were given coupons offering discounts during the Christmas season to help retain Microsoft's loyal following.
The move helped drive the firm's first-quarter revenue up 32% to $14.4bn from 10.9bn in the same period a year ago.
Microsoft is pinning profit growth over the next few years on the latest versions of its two flagship products and 2008, starting in July, will be the first 12-month period to benefit from earnings from sales of computers upgraded with the new software.
The company founded by Bill Gates said deferred marketing expenses was going to dent fourth-quarter profits, but said full-year earnings would closely align with earnings expectations of $1.68 to $1.72 per share.