REDMOND, Washington: Even after setting aside $1.06 billion (€766.4m; £515.4m) to cover anticipated costs incurred by defects in its Xbox 360 video game consoles, the planet's largest software company declared a 7% rise in profits during the year's second quarter.

Microsoft's net earnings came in at $3.04m versus $2.83bn in the year ago period, while total revenues rose 13% to $13.37bn

Contributing to the dollar deluge was web advertising, which soared 33% to deliver revenues of $545m - despite which the firm's online division saw its overall loss burgeon from $187m to $239m.

Nonetheless, Microsoft predicts double-digit growth in 2008, citing upgraded server software and its long-awaited Halo 3 video game.

[Unless, that is, the lurking sub-prime crocodile erupts from the murky waters of the world economy to drag down and chomp the inessentials market.]

Data sourced from; additional content by WARC staff