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Microsoft beat expectations this afternoon with earnings per share of 35 cents for its fiscal first quarter. (Analysts had been predicting 31 cents per share, in line with company forecasts.) Revenue was $10.8 billion, an 11 percent increase, and slightly more than the top end of the company's projection for the quarter.

Revenue rose 70 percent in the Entertainment and Devices Division (Xbox 360, mobile devices, etc.), which also reported a smaller loss. At the same time, the company's Online Services Business, including MSN and Windows Live, fell back into the red with a $136 million loss. More to come.

Update: Here's Microsoft's 10Q filing, with more detail. Here's how the filing explains the loss in the Online Services Business for the quarter:

OSB operating income decreased for the three months ended September 30, 2006, reflecting the decline in revenue, increased headcount-related costs primarily as a result of continued investments in Windows Live, adCenter, and other properties, and increased cost of revenue as a result of the build out of our data center infrastructure. Headcount-related costs increased 43%, reflecting both an increase in salaries and benefits for existing headcount and a 40% increase in headcount.

Update: Here's my story on Microsoft's earnings, from the newspaper. Also, the Seeking Alpha site has posted a transcript of Microsoft's earnings call.