Dispelling rumors that its recent legal battles might affect the bottom line, Microsoft beat Wall Street estimates and posted net income of $1.13 billion. In the same quarter a year ago, the Redmond giant made $741 million. Second quarter sales rose to $3.58 billion, up from $2.68 billion the year before.

Microsoft attributed its strong quarter to sales of Office 97 and Windows 95, which got a boost during the holiday season. The company said that future quarters would be harmed by economic problems in Asia.

"European revenues were up 33% over the same quarter last year, and OEM revenues expanded 40%," said Greg Maffei, Microsoft's CFO. "But the news isn't all good, as revenues from Southeast Asia and the Far East declined 8% from the prior quarter. Economic weakness in these geographies clouds the outlook for calendar 1998.