Microsoft Corp.(MSFT), the world's largest software maker, on Thursday posted an increase in quarterly profit on robust sales of its Windows software for personal computers but forecast revenue for the current quarter below Wall Street expectations.

Shares fell 66 cents, or 2.6 percent, to $24.19 on Inet on the lower revenue outlook, with analysts saying that slower sales of Microsoft Xbox (search) video game console were the most likely reason.

Net income reached $3.14 billion, or 29 cents per share, in the fiscal first quarter ended in September compared with $2.53 billion, or 23 cents per share, a year earlier, which included a 3 cent charge for a settlement with Novell Inc. (NOVL).

Excluding a legal settlement charge, Microsoft said it earned 31 cents per share in the first fiscal quarter.

Analysts on average expected Redmond, Washington-based Microsoft to earn 30 cents per share, excluding the legal charge related to a settlement with RealNetworks Inc.(RNWK), according to Reuters Estimates.

Revenue rose to $9.74 billion from $9.19 billion. The average analyst revenue forecast was $9.79 billion.

Microsoft forecast revenue in the December-ending quarter of $11.9 billion to $12.0 billion and diluted earnings per share of 32 cents or 33 cents.

"We'd hoped to see a little more upside," said Brendan Barnicle, an analyst at Pacific Crest Securities.

Analysts had expected revenue of $12.26 billion in the December quarter.

The company also said it would accelerate its stock repurchase plan, aiming to finish the remaining $19 billion buy-back no later than December 2006.

For the fiscal year ending June 2006, Microsoft said it expects to post a profit of $1.26 to $1.30, excluding the 2 cents per share RealNetworks charge, on revenue of $43.7 billion to $44.5 billion.

Wall Street had forecast a $1.31 per share profit on $44.29 billion for Microsoft's current fiscal year.

Microsoft is trading at 19 times estimated earnings for 2006, below the average price-earnings ratio of its software peers of 26 on the Goldman Sachs Software Index (search).