Due to the strong sales of its latest operating system and its 2007 version of Office suit Microsoft’s profits boosts despite a 1-billion-dollar charge to repair faults in its Xbox 360 gaming console.

Announcing its financial results, the Redmond company said that net profit for its fiscal fourth quarter totalled 3.04 billion dollars, or 31 cents a share, compared to 2.83 billion dollars, or 28 cents a share, a year ago. Revenues rose 13 per cent to 13.4 billion dollars.

“Surpassing $50 billion in annual sales is a testament to the innovation and value that our product groups delivered into the marketplace, as well as the outstanding execution by our field sales, marketing teams and partners to bring that value to life with our customers,” said Kevin Turner, chief operating officer at Microsoft.  “In fiscal year 2008, we will continue to drive growth through new product offerings, such as Windows Server 2008, Visual Studio 2008, SQL Server 2008, Office PerformancePoint Server 2007, and Microsoft Dynamics Live CRM.”

Sales in the client division, which is dominated by Windows Vista, rose 14 per cent to 3.81 billion dollars, compared to 3.35 billion dollars a year ago.

Web advertising revenue rose 33 percent to $544 million, but the online division widened its loss overall to $239 million from $187 million last year.

"Our results this quarter cap off an extremely strong fiscal year for the company," said chief financial officer Chris Liddell. "We have healthy core businesses and are strategically investing in growth opportunities, which will build on our success and contribute to continued double-digit revenue and earnings growth in fiscal year 2008."

Earlier this month, Microsoft said widespread overheating problems in the Xbox would result in a charge of up to 1.15 billion dollars to repair and offer a new extended warranty to customers. But despite those problems, Microsoft hopes to turn to profit its gaming console in 2008, due to September release of "Halo 3," the latest installment of one of the best-selling game franchises.