Microsoft has reported record revenue of $60.4bn in its fiscal year ending 30 June.
But the software giant disappointed analysts with the performance of its online services business.
Microsoft recorded a net profit of $4.3bn for the April to June quarter, 41 per cent higher than a year earlier.
However, the company's online services business continued to underperform recording a $488m loss in operating income for the same period.
The division clocked up an operating income loss of $1.2bn for the 12-month period, compared to $617m for the previous year.
"This is the area where we are seeing direct impact from the economic slowdown," said Microsoft chief financial officer Chris Liddell.
Microsoft has spent much of 2008 trying to bolster its online services with a series of unsuccessful efforts to acquire Yahoo, most recently with a joint offer with investor Carl Icahn.
The quarter saw strong revenue growth for Windows Server and SQL Server, and positive results in licensing for Office 2007 and Windows Vista, passing the 180 million mark in the 18 months since launch.
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