Microsoft produced record fourth quarter sales of $16.04bn (£10.47bn), 22% up on the same quarter 2009, as demand for PCs running its new operating system, Windows 7, improved worldwide.
Microsoft said operating income, net income and earnings per-share for the quarter were $5.93bn, $4.52bn and $0.51 respectively, which were each up about 50% on a year ago.
Redmond said it had now sold more than 175 million licences for Windows 7. This was supported by strong sales of the new Office 2010, Windows Server, Xbox, and Bing, which gained market share for the 13th consecutive month.
COO Kevin Turner said Microsoft's transition to cloud services was well under way. "We look forward to continuing our product momentum this fall, with the upcoming launches of Windows Phone 7 and Xbox Kinect."
However Microsoft followed Google's example and pulled out of the mobile phone market after just six weeks.
The fourth quarter results pushed Microsoft's annual sales to a record $62.48bn, 7% up on 2009.
Operating income, net income and diluted earnings per-share for the year were $24.10bn, $18.76bn and $2.10 - up 18%, 29% and 30%, respectively on 2009.
Microsoft said it expected to spend between $26.9bn and $27.3bn in the year to 30 June 2011.