The software giant says that strong sales of business services, and the company’s cost control efforts, offset the weakening demand for its Xbox gaming console and related services. Microsoft generated net income of $5.1B, down 2.4% vs the same period last year, on revenues of $17.4B, up 6.0%. The revenue figure was ahead of the $17.2B that analysts forecast. And earnings at 60 cents a share beat predictions of 58 cents. The news sent shares up about 2.5% in early after-market trading. Microsoft says that revenues for its Server & Tools business were up 14% to $4.6B. Microsoft Business was up 9% to $5.8B, due in part to strong sales of Office 2010. The Windows 7 operating system also remains popular as Microsoft plans to roll out Windows 8; the Windows and Windows Live operation generated $4.6B in revenues, up 4%. But the Entertainment & Devices Division was down 16% to $1.6B. The company attributes that to the “soft gaming console market.” The company says that it expects operating expenses of as much as $28.7B for the fiscal year that ends in June — down slightly from its prediction in January of as much as $28.9B. “We’re driving toward exciting launches across the entire company, while delivering strong financial results,” CEO Steve Ballmer says.

Get Deadline news and alerts sent to your inbox.