Microsoft Corp. today announced revenue of $9.62 billion for the quarter ended March 31, 2005, a 5% increase over the results in the same period of the prior year.

Operating income for the third quarter was $3.33 billion, compared to $1.28 billion in the prior year. Net income and diluted earnings per share for the third quarter were $2.56 billion and $0.23 per share, which included $0.05 of legal charges. For the previous year, net income and earnings per share for the third quarter were $1.32 billion and $0.12 per share, which included $0.17 of legal charges.

Revenue and operating income growth for the quarter were driven by a healthy Server and Tools business. Third quarter revenue growth for the segment of 12% over the prior year resulted from double-digit growth in the SQL Server and Exchange Server product lines. Customers who acquired Microsoft server products during the quarter include Continental Airlines, First Horizon National Corporation, and LendingTree, LLC.

During the quarter, Microsoft announced significant new real-time communication and collaboration capabilities for the Microsoft Office System of products, servers, and services. With the acquisition of Groove Networks, Microsoft customers can now turn to their trusted supplier of Microsoft Office software for real-time, server-based, and peer-to-peer collaboration solutions. Microsoft also introduced Microsoft Office Communicator 2005, the Microsoft Office Live Communications Server 2005 Service Pack, and Microsoft Office Live Meeting 2005.

Mobile and Embedded Devices revenue grew 31% over the prior year as Windows Mobile(TM) products experienced strong demand. Windows Mobile license sales for connected devices were more than double prior year levels while the Windows Mobile software platform continues to experience strong momentum with developers. There are currently over 380,000 active Windows Mobile professional developers and over 18,000 Windows Mobile applications.

The company repurchased more than 95 million shares of common stock for $2.42 billion during the quarter and has repurchased more shares year to date than it did for all of fiscal 2004. Overall, the company has returned $39 billion to investors during the fiscal year through share repurchases and dividends.