Microsoft announced late Wednesday that it had exceeded earnings estimates for the ended September 30, thanks largely to strong sales of Windows 2000 and Windows Millennium Edition (Windows Me). The company saw net profits rise to $2.58 billion (compared to $2.19 billion in the same quarter a year before), while revenues totaled $5.8 billion. The company said "performance was solid" across all of its businesses, while it is "bullish" about Windows 2000, which had reportedly not been selling as well as expected. With the unexpectedly positive earnings announcement, Microsoft's stock began to rally after falling to a 52-week low earlier in the week.

"Results were solid across all businesses, led by accelerating deployments of Windows 2000 Professional in the business sector and Windows Me in the consumer arena," said Microsoft CFO John Connors. "We also continued to make great progress with our server products, proving our ability to deliver mission-critical solutions to customers such as Lycos, FreeMarkets, RadioShack, The Home Shopping Network and GMAC. While we remain guarded about worldwide economic conditions, we are extremely enthusiastic about our Windows 2000 generation of server products."

Microsoft points to its many product releases during the quarter, such as its .NET Enterprise Servers and Windows Me, as evidence of future earnings potential. Windows Me, which wasn't particularly well-received by the press, will nonetheless sell hundreds of millions of copies over the next twelve months, thanks to PC bundling. And many analysts expect Windows 2000 sales to jump now that the important SP1 bug-fix release is available