Strong product sales led Microsoft to its fastest first-quarter growth in seven years across all five business segments, beating analyst expectations.

Revenue for the quarter was up 27 per cent at $13.76 billion compared to $10.81 billion a year ago, Microsoft said on Thursday. Consensus estimates from Thomson First Call analysts were for the company to generate revenue of $12.57 billion

At $5.92 billion, operating income for the quarter also had double-digit percentage growth: an increase of more than 25 per cent over operating income reported for the same period last year of $4.47 billion.

Microsoft's first quarter was buoyed by the highly anticipated launch of the Xbox 360 game Halo 3, just days before the quarter's close. In its first 24 hours on sale the game brought in $170 million in sales; it became the fastest selling video game in history after being in the market for just a week and a half, according to the company.

Strong performances from Microsoft's client, business, server, tools, and online divisions also contributed to revenue growth in the quarter. In particular, Microsoft said sales of its Windows Vista OS experienced double-digit growth through multi-year business contracts, and demand for Microsoft Office, Windows Server and SQL Server was also high.

Looking ahead, Microsoft said it expects to report revenue in the range of $15.6 billion to $16.1 billion for its second quarter, which ends 31 December. Operating income is expected to be in the range of $5.9 billion to $6.1 billion, while diluted EPS are expected to be between $0.44 to $0.46 for the second quarter, the company said.

For its fiscal year 2008, Microsoft expects revenue in the range of $58.8 billion to $59.7 billion and operating income in the range of $23.3 billion to $23.7 billion. Diluted earnings per share are expected to be between $1.78 and $1.81 for the fiscal year, the company said.