Posting fiscal 2010 first-quarter financials before market opening this morning, Microsoft (MSFT) said it earned 40 cents a share on revenue of $12.92 billion.

And while net income per share was down 17 percent from a year earlier thanks to declining revenue in all but one of the company’s businesses, it still bested analysts’ estimates, which called for a profit of 32 cents a share.

And although sales fell for the third consecutive quarter, dropping 14 percent to $12.9 billion, they too topped forecasts of $12.4 billion.

The software giant attributed the performance to strong Windows and Xbox demand and to cost discipline.

Shares in the company spiked more than 10 percent in premarket stock trading.

(You can peruse slides of the financial results here and a liveblog of the conference call here.)

“We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows,” said Chris Liddell, CFO at Microsoft. “We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions.”

Here is the press release on the Q1 results (without performance tables, which you can see here):

Microsoft Reports First-Quarter Results

Windows and Xbox exceed expectations due to strong consumer demand; cost discipline drives earnings per share growth.

REDMOND, Wash.–Oct. 23, 2009–Microsoft Corp. today announced revenue of $12.92 billion for the first quarter ended Sept. 30, 2009, a 14% decline from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $4.48 billion, $3.57 billion and $0.40 per share, which represented declines of 25%, 18% and 17%, respectively, when compared with the prior year period.

These financial results reflect the deferral of $1.47 billion of revenue, an impact of $0.12 of diluted earnings per share, relating to the Windows 7 Upgrade Option program and sales of Windows 7 to OEMs and retailers before general availability. Adding back the deferred revenue, revenue totaled $14.39 billion, a 4% year-over-year decline, and EPS totaled $0.52 per share, an increase of 8% over the same period of the prior year.

“We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows,” said Chris Liddell, chief financial officer at Microsoft. “We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions.”

Windows 7 and Windows Server 2008 R2 launched globally on Oct. 22 as anticipated. Also during October, Microsoft released Microsoft Exchange Server 2010 to manufacturing and in July announced a strategic partnership with Yahoo! Inc. to provide search results for their global properties.

“The worldwide launches of Windows 7, Exchange Server 2010 and Windows Server 2008 R2 are exciting milestones for Microsoft, our partners and customers,” said Kevin Turner, chief operating officer at Microsoft. “We are pleased by the early positive response we are receiving for these products.”

Business Outlook

Microsoft is reducing operating expense guidance to $26.2 billion to $26.5 billion, for the full year ending June 30, 2010.

Management will discuss first-quarter results and the company’s business outlook on a conference call and webcast at 7:30 a.m. PDT (10:30 a.m. EDT) today.

The online auctioneer reported revenue of $2.23 billion, up six percent from a year ago, while net income fell 29 percent to $350 million or 27 cents per share. Excluding some items, earnings were 38 cents a share. Analysts who follow eBay expected the company to turn in a gain of 37 cents per share on sales of $2.14 billion.

Gross merchandise volume–the value of all goods sold via eBay–rose seven percent from the same period last year. Analysts had believed it would drop between five and 10 percent.

EBay said it sees fourth-quarter earnings of 38 cents to 40 cents a share, on revenue of $2.2 billion to $2.3 billion.

“Our third quarter results were strong, with PayPal gaining momentum and market share worldwide and our core eBay business showing positive trends,” John J. Donahoe, eBay’s chief executive, said in a statement.

NOTES FROM THE EARNINGS CALL

On business overall:
eBay CEO John Donahoe: “These are strong results for a strong company….We’re seeing our turnaround efforts begin to pay off.”

On the economy:
Donahoe: “The economy as we see it is stable, and we’re cautiously optimistic about consumer spending going into the holiday.”

On the Skype lawsuit:
eBay CFO Bob Swan: “We’re highly confident in our position.”

“We are very impressed by Apple’s ability to post a record profit quarter during difficult macro spending conditions,” Canaccord Adams analyst Peter Misek said in a note to clients this morning. “A host of new product introductions and continued traction with the iPhone give us confidence in the sustainability of Apple’s operating model.”

Suffice it to say, Misek wasn’t the only the analyst lauding Apple’s (AAPL) fourth-quarter performance. Below a selection of commentary from other Apple watchers:

Gene Munster, Piper Jaffray
“September results were strong despite headwinds of iPhone production constraints and a Mac desktop offering in need of a refresh. We expect these headwinds to become tailwinds in the December quarter, which we believe will be positive for AAPL shares in the coming months.”

Mike Abramsky, RBC Capital Markets
“With strong financial performance and product uptake amidst recession, and further catalysts (iPhone in China, Tablet, refreshed iMacs, iPhone share gains/momentum), we foresee further upside for the shares.”

Maynard Um, UBS
“Upside to virtually every metric in the qtr backs our positive view on Apple. We continue expect greater “recurring” iPhone hardware revenue (growing installed base & stickiness of the App Store), which should drive more visibility into iPhone sales (20%+ of our FY10 iPhone shipments), as well as iPhone expansion driven by new partnerships (& end of exclusivities). Longer term, we believe a service to provide seamless access & mobility of digital content across all products may be the draw (halo) that drives additional future Apple product sales.”

Tavis McCourt, Morgan Keegan
“Overall, Q4:09 was a strong quarter for Apple, as the Mac is nearly becoming the de facto computer for the back-to-school season. Additionally, iPhone trends remain remarkably strong, with unit economics holding up at unheard of levels in the wireless industry.”

Yair Rainer, Oppenheimer
“As usual, Apple appears to be leaving plenty of room for upside surprises to both revenue and margins. On the revenue side, Apple should benefit from continued Mac momentum (particularly in Europe), higher recognized iPhone revenue, and some channel fill for both Mac and iPhone. Gross margin upside is likely to come from a higher proportion of recognized, high-margin iPhone revenue.”

This morning, Goldman Sachs (GS) and Bernstein both had good things to say about the company, noting that investors may have underestimated its potential for growth. “Discussions with advertising agencies, including a dinner we hosted with senior agency executives, point to rising spending on Google since June, led by travel, clothing and home improvement advertisers,” Goldman said in a research note issued this morning.

Bernstein analyst Jeffrey Lindsay was similarly bullish. “We expect Google’s results to show some signs of cyclical improvement in Q3, as easier comparisons and more favorable currencies should benefit topline trends,” he wrote in a research note. “Paid search is an early cycle advertising format given the immediacy of keyword auctions, and Google has maintained its dominant position within the category.”

Also bolstering Google (GOOG) shares today are the recent comments of company CEO Eric Schmidt, who told journalists at a roundtable discussion last week that the economy is starting to turn around. “The worst is behind us and we clearly see aspects of recovery, and what is notable is we’re seeing aspects of recovery not just in the United States but also in Europe,” Schmidt said. “We are increasing our hiring rate and our investment rate in anticipation of a recovery.”

You see, Palm (PALM) defines units sold as products sold to on-the-street customers or to resellers like Best Buy (BBY) and Amazon.com (AMZN). Which means that Palm can report a unit sold while it’s still sitting at inventory at various retail outlets. In other words, a Pre sold is not necessarily a Pre activated. As Eller notes, that’s problematic.

“We have been perplexed by a disconnect between PALM’s device units sold and our estimates of store level sell through,” Eller writes. “According to PALM’s reported sell through, inventory increased by 13k units and since the ‘vast majority’ of both the device units shipped and the device units sold were units of the Pre, there couldn’t be an inventory problem. The gap between the two is only 13k.”

Continuing, Eller adds a cautionary note: “However, since the company recognizes revenue on sell in to the channel and the company defines device units sold as units that have been shipped from Sprint (their primary customer) to either customers or second tier distributors, PALM could offer investors a high number of units shipped but still have a glut of inventory in the channel. We believe that channel inventory is currently about 11 weeks, which we believe will pressure reorder rates and make it more difficult to sell high ASP products going forward.”

An 11-week glut of inventory in the channel? If that’s the case, it’s certainly cause for concern, more so because many investors are evidently unaware that this is even a possibility. “[Palm’s definition of sold] does not appear to be understood by investors,” Eller notes. “We polled several of the investors who attended the Boston road show lunch and each was under the impression that sell through translated into customer activations. How can this be?”

Good question. Palm and Sprint (S) investors both might want to pay a bit more attention to Sprint’s 10-k in the future.

I’ve asked Palm for comment and will update this post when it responds.

UPDATE: This just in from Palm:

“The sell-through data we post reflects carriers’ sales to their customers. For example, Sprint customers include consumers who buy in a Sprint store, and Sprint retail partners such as Best Buy and RadioShack. We rely on our wireless carriers to provide us with sell-through data, and we note this fact in our 10Q.”

[Image credit: Flickr/Spintar]

Excluding charges related to stock options and other items, Palm (PALM) said net losses were $13.6 million, or 10 cents a share, for the recent period. Revenue slipped to $68 million from $366.9 million in the same period last year. Excluding revenue deferred from sales of the company’s new Pre handset, Palm said adjusted revenue would have been $360.7 million. Analysts had expected the company to turn in a loss of 24 cents a share on sales of $291 million.

Palm shipped a total of 823,000 smart phone units during the quarter, up 134 percent over the fourth quarter of fiscal year 2009, but down 30 percent year over year. Smart phone sell-through for the quarter was 810,000 units, up 76 percent from the fourth quarter of fiscal year 2009 and down 21 percent year over year.

Speaking to analysts Thursday afternoon, Palm execs claimed that “the vast majority of new sales” for the quarter were generated by the Pre. But they declined to separate Pre sales from those of other handsets.

Skeptics will no doubt look at this and conclude that Palm didn’t meet expectations for Pre shipments of about 520,000. That, or the company is still selling a hell of a lot of Centros.

“We’re making significant progress with Palm’s transformation, and our culture of innovation is stronger than ever,” said Jon Rubinstein, chairman and chief executive officer. “We’re launching more great Palm webOS products with more carriers, and turning our sights toward growth.”

A few more Jon Rubinstein remarks from the earnings call:

On additional form factors:

I’m a big believer in families of products, and we’ll continue to evolve the line in the future and have a family of products for webOS.

On Carrier Customization:

We don’t really talk about our carrier agreements.

On Pre sales:

Sell-in and sell-through…the vast majority of new sales…relate to the Pre.

On the Pixi cannibalizing Pre sales:

The Pixi is a more cost-effective offering, so yes we expect some people might come into the store looking to buy a Pre and end up with a Pixi. But others might come in looking for a Pixi and end up with a Pre. As I said, we’re big believers in families of products. We’re happy to have two webOS products on the market.

On carrier diversification:

Sprint did a phenomenal launch with the Pre. They invested heavily in advertising….We’re looking forward to launching the Pixi with them as well. We don’t talk about our roadmap, but we’ll have more carriers and more products in the future.

On Motorola’s new Motoblur service:

We don’t really know much about it. To build really great consumer products, you have to own the OS and services. And the fact that we have webOS as our asset is really important.

“A study conducted by Microsoft Research shows that consumers can process results with images 20% faster than text only results,” Microsoft’s Todd Schwartz explained. “So it’s clear that images play a big part in helping consumers with a variety of search activities….Visual Search allows you to quickly scroll through the galleries or do a one-click refinement using the quick tabs on the left, which are specifically relevant to the type of results you are browsing through.”

Think of Microsoft’s innovation as iTunes Cover Flow for search. And though it currently works only for mainstream queries (celebrities, dog breeds, iPhone apps, FBI’s Most Wanted, etc.) it’s quite impressive. And if Microsoft (MSFT) works quickly to extend it beyond its currently limited purview, Visual Search could do much to differentiate Bing from Google (GOOG). Certainly, Google doesn’t offer anything quite like it at the moment.

Among the enhancements to Yahoo’s search page design–the features that, in the company’s words, “exemplify how Yahoo! is continuing to innovate in search technology and the user experience”–are the following:

• a unified, Bing-like design
• an enhanced search assistant
• the ability to play video within search results
• a set of filters that allow users to refine their searches based on prior queries or follow-on searches of other sites like YouTube, Facebook, LinkedIn and Twitter (click on image below to enlarge).

“The Web is huge, billions of pages, millions and millions of sites and domains,” explained Larry Cornett, Yahoo’s VP of search products and design. “You do not care about all of it. We are bringing front and center the features that are going to make it easier and safer to search.”

Which is all well and good. But isn’t that exactly what Google and Microsoft claim to be doing as well? Doesn’t everyone have a search assistant these days? Doesn’t Microsoft’s Bing already offer in-line video viewing in its search results? (Google once did as well, but disabled the feature over performance issues.) And aren’t Yahoo’s filters basically another version of Google’s “Show More Results” feature? They certainly appear to be.

So these things aren’t true innovations; rather, they’re innovations of the new-to-Yahoo sort. They’re table stakes at a search game that Yahoo has already lost. So “bringing front and center the features that are going to make it easier and safer to search” doesn’t really mean much when they’re already front and center in market-leading offerings, as Danny Sullivan notes over at Search Engine Land.

“There are certainly some aspects that are becoming commoditized in the foundation in search,” Cornett said. “You can either overwhelm people and give them millions and millions of results or show them what they care about the most. That is exactly where we’re going to continue, building a search experience that understands what they’re looking for.”

That sounds great–except it’s not anything different from what Microsoft says. And if Google doesn’t say it, that’s because searchers are voting with their actual search activity that Google’s already doing it. In addition, while Cornett suggested that Yahoo is somehow spending huge amounts of time and money coming up with a better personalized experience over competitors, the fact remains that Google has long offered personalized results that outdistance Yahoo.

Net income in eBay’s second quarter, ended June 30, fell 29 percent to $327 million, or 25 cents a share, from $460 million, or 35 cents a share from a year earlier. Revenue fell four percent to $2.1 billion.

The results came in at the high end of the Q2 outlook eBay provided back in April when the company said it expected revenue of between $1.85 billion and $2.05 billion and earnings per share of between 23 cents and 26 cents.

“We drove solid second quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business,” eBay CEO John Donahoe in a statement. “I’m pleased with our pace, our progress and our performance.”

Can’t be much pleased with the company’s core online-auction business, though. That continues to show weakness. The amount of goods and services flowing through eBay’s (EBAY) marketplace, called “gross merchandise volume,” fell 10 percent year-over-year to $11.1 billion. And that’s not good. Especially when Amazon.com (AMZN) is gaining market share so quickly.

“The core eBay marketplaces business continues to be the most important driver for eBay’s share price,” Heath Terry of FBR Capital Markets said in a note to clients this week. “While the company is making progress, management still has a long way to go in addressing the years of technological neglect at the company.”

Analysts surveyed by Thomson Reuters expected Intel (INTC) to report revenue of $7.3 billion and a profit of eight cents per share. Instead the company reported revenue of $8 billion and non-GAAP profits of 18 cents (PDF). And it predicted third-quarter revenue above Wall Street’s expectations.

In a statement, CEO Paul Otellini said the results “reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half.”

Now admittedly, Intel did post earnings of 28 cents a share in the same period last year. So its fortunes clearly declined in the months that followed. That said, the company appears to be on the rebound after hitting the bottom Otellini declared back in April.

“Basically, very strong numbers for the quarter and guidance is in line with seasonal trends,” Collins Stewart analyst Ashok Kumar told Reuters.” It’s an extremely strong number given the macro economic backdrop. Despite those headwinds, the company delivered significant upside to both guidance as well as as expectations. The big unknown is whether it’s anything more than inventory replenishment.”

Intel shares are on the upswing on the news.

Wall Street had expected Palm (PALM) to report a loss of 62 cents a share on revenue of $80.6 million. Instead, the company reported a net loss of $105 million, or 78 cents a share. But, excluding some items, the loss came to 40 cents a share. Revenue was $86.8 million, down from the $296 million Palm posted in the year-ago quarter. Palm shipped a total of 351,000 smartphones during the quarter, a year-over-year decline of 62 percent. But this was a six percent increase over the third quarter.

“The launch of Palm webOS and Palm Pre was a major milestone in Palm’s transformation; we have now officially reentered the race,” Palm CEO Jon Rubinstein said in a statement. “We have more to accomplish, but the groundwork is laid for a very promising future here at Palm. Our senior management team is capable, motivated and focused on execution; there is a large group of developers waiting to build great applications for Palm webOS; and we have a new product pipeline that we think will set a standard for the industry.”

Palm shares are spiking on the news. They’re up more than 10 percent in after-hours trading at $15.47.

Some notes from the earnings call:

Palm is not disclosing any data on Pre sales to date….Asked about the idea of licensing webOS to other vendors, Rubinstein declined comment, but interestingly said it “isn’t a religious issue” for the company.

Rubinstein on Web 3.0:

“The Pre takes better advantage of the benefits of Web 3.0 than any other mobile device available today.”

Rubinstein on the Pre’s launch:
“I couldn’t be happier with our launch. We are exactly where we hoped we would be.”

Rubinstein on supply constraints:

“The factory is ramping really well. But if demand increases, we’ll have to chase it a bit.”

Rubinstein on competing with Apple (AAPL) and RIM (RIMM):

“There is room for three to five players in this space. We don’t have to beat one another to prosper.”

Rubinstein on new carrier partners:

“As you know, we’ve launched with Sprint and we’ve announced Bell Mo up in Canada. You’ve heard a lot of interest out there and we are very flattered that lots of carriers are interested in Web OS and the Pre and we are obviously working on expanding our distribution but we have nothing to announce at this point in time.”

Rubinstein on the webOS software development kit:

“We’re eager to grant wider access to our SDK but we need to do so in a measured and methodical fashion, so we can be sure we are providing a great development experience. Over the next few weeks, we expect the program to grow from hundreds to thousands of developers and our goal from there is to make our SDK available to everyone by the end of this summer.”

Rubinstein on the early market for the Pre:

“I think we’re exactly where we hoped we would be. We don’t have a lot of data yet, but one of the interesting things we’ve been seeing is a lot of enterprise interest right now.”

Rubinstein on how the Pre’s App Catalog can compete with rivals like the iTunes App Store:

“You’ll just have to stay tuned and see how it all rolls out.”

The company neither admitted nor denied wrongdoing, though CEO Sal Iannuzzi’s comment on the matter was fairly apologetic, as well it should be–after all, Monster had to restate its results for 1997 through 2005 to the tune of about $339.5 million (pre-tax). “This is an important step in closing an unfortunate chapter in the company’s history and putting the issue firmly behind us,” Iannuzzi said in a statement. “Our current executive team has spent the last two years refocusing Monster on its customers and shareholders, retooling the day-to-day management, and overhauling governance in an effort to adhere to the highest standards.”