Sales of Windows Vista, the latest version of Microsoft’s dominant operating system buoyed quarterly profits at the world’s largest softfware developer, easing misgivings over the company’s massive investment in the system.

For the three months to March 31, Microsoft’s profit jumped 65 per cent to $5 billion (£2.5 billion), compared with the same period last year, beating Wall Street’s expectations

The figures were also buoyed by sales of Office 2007, the software suite that includes stalwart applications such as Word and Excel.

Shares in Microsoft rose more than 4 per cent in extended trading on the Nasdaq Stock Market.

Revenues for the quarter were up nearly a third, at $14.4 billion, compared with analysts forecasts of about $13.9 billion.

Windows Vista was released at the end of January. The revamp of its biggest cash cow was billed as the most important event for Microsoft in a decade.

Five years in the making, Vista’s 50 million lines of code cost an estimated $7.5 billion to assemble but ahead of its release fears circulated that the system would be beset by security and other problems.

The concerns were assuaged by the latest financial figures, which showed that Microsoft’s Client, which includes Windows achieved a 67 per cent jump in sales compared with a year earlier, to $5.3 billion.

Sid Parakh, an analyst at McAdams Wright Ragen, said sales at the Client unit were “surprisingly ahead of where we thought they would come in.”

Business division revenues, which includes sales of Office 2007, rose 34 per cent to $4.8 billion.

Microsoft said Vista beat internal forecasts by $300 million to $400 million, and Office 2007 sales were $200 million better than expected.

However, Microsoft’s entertainment and devices division, which includes the Xbox 360 game console and the Zune music player, posted a 21 per cent sales drop in revenues to $929 million. The softer numbers had been expected after the key Christmas quarter.

Microsoft said it is on track to sell 1 million Zunes, which are competing with Apple’s dominant iPod, by the end of June.

Revenues at Microsoft’s online services division, which competes with Google and Microsoft, edged up 11 per cent to $623 million in the quarter. Online advertising revenue grew 23 per cent year-over-year, and Liddell said in a conference call with analysts that “revenue per search” is higher than a year ago, when the company was still using a third-party ad platform.

Microsoft added that it repurchased more than $6.7 billion in stock during the quarter.

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