2:47 p.m. Second consecutive quarter of double-digit growth for the server division. And revenue for the online business was down 4%. Growth in display advertising, offset by lower search revenues. There's that declining search business ... that doesn't make this would-be shareholder happy.

2:49 p.m. Entertainment and Devices grew 70%, and interactive gaming revenue more than doubled. Six million consoles sold, as mentioned before, and accessories and game sales are also "at record levels." And "finally," the Zune! I love the Zune. It will be out soon... did she say November 4? I can't wait. Please send a brown one to this address ...

2:51 p.m. Purchased $11 million of company stock from tender offer and share repurchase program in the quarter. Q1 "was a good start to the first fiscal quarter" of 2007, and she's looking for an "exciting" fiscal year.

2:53 p.m. Back to Chris. He expects PC unit growth to be higher in consumer markets than business markets; emerging markets than domestic and European markets. Raising the top of the overall revenue growth targets for the second quarter, and the whole year. They've been scooching revenue from the second quarter to the third quarter -- this is timing of revenue recognition for already-sold software that won't be delivered until third quarter.

2:56 p.m. Expect to continue to see double-digit growth in SQL server and Enterprise server markets in the second and third fiscal quarters. Expect to have sold 10 million Xbox 360 consoles by the end of the holiday season.

3:01 p.m. Ack! Lost my connection for a few minutes. I'll fill in later. It seems rather dull, we're talking about changes in unearned revenue guidance.

3:03 p.m. Warning! Warning! Holiday sales are hard to predict! This part always makes me laugh. Of course you can't know what people want. If you did, you'd be selling a lot more than $10 billion a quarter (not so shabby naturally!)

3:05 p.m. Questions: Heather Bellini, UBS. She wonders if we can know what the premium SKU launch mix was in the first quarter -- 52-54% for the first quarter, says Chris.

3:07 p.m. Adam Holt, JPMorgan: Cost structure for 2nd quarter -- where is cost benefits coming from for Xbox 360? Lower cost per console, and good software attach (which I think means that they sold software along with the Xbox 360, which is a lot cheaper as a percentage of revenue than the hardware). There was some revenue saved on Opex.

3:10 p.m. Charlie ... I missed his bank. Chris, you're sounding upbeat about Online services group despite the fact that you're going sideways! Why are you so happy? Chris says he's pleased with the revenue per search, "we're lapping where we were when we came off the Overture acquisition last year." Plan to go above the revenue per search on year-over-year basis.

3:12 p.m. Goldman Sachs has lots of technical questions about revenue recognition of the Dynamics, which no one seems to really care about.

3:13 p.m. What's contributing to the higher earnings per share guidance? Lower OIBDA, slightly higher tax rate are negatives, and better investment income, better share buyback, and better operating income are helping increase the earnings per share.

3:17 p.m. Jason Maynard, Credit Suisse. Wants to know about use of cash: high prices in online space. Why? What are your criteria? How about capex plans? We bought four companies in the first quarter, says Chris, and they have to be ROI and economic value-positive. We probably turn down one or two companies for every one that we buy (doesn't seem all that rigorous to me, but whatever). Will plan to buy companies in the online services area for sure ("it's a possibility"), and probably not so much in the server arena -- they're sort of tapped out there.

3:19 p.m. John with Prudential. Vista Enterprise in particular is only available with some sort of an SA, or an EA, i.e. they can only buy it from OEMs, how will that play out over the year? This obviously confuses the finance guys at Microsoft (and I think confuses John, himself, not to mention me). The revenue in the OEM agreements will be recognized instead of deferred, but will the presence of mandatory SA agreements have a positive impact on unearned revenue? To the extent that we see more business done through volume licensing, says someone, you'll see more unearned revenue.

3:22 p.m. Update on Longhorn product cycle? Still on track for second half of the year (i.e. early 2007 calendar year, I think).

3:23 p.m. Virtualization. It's good for customers, and the industry is going there. "We feel like our pricing is very competitive, especially compared to other pricing out there ... pretty easy to understand ... pretty competitive." Is 10-12% sustainable? She doesn't answer but says lots of happy fuzzy things about virtualization being "good for the industry."

3:24 p.m. Cash flow growth? It will follow normal cycles, go down as Xbox 360 inventory grows over the next month, then "wash itself out of the system" as revenue is picked up over the holiday season. Some impact from the buyback. And... "Phenomenal results for SQL server, why is that growth rate still so strong?" Particularly delighted in the larger enterprises looking to SQL for critical applications, and continue to do well in mid-sized space as well, so happy! So so happy! Great growth internationally, as well. And that's all.

The analysts seemed generally happy with Microsoft, and while they weren't exactly licking any boots, the questions were non-pointed and there wasn't any hard-nosed following up when the answer was fuzzy and, well, not an answer. So, we have this. An entirely boring conference call that tells us nothing more than was in the earnings report.

The investors? Not impressed, either, and sent the stock back down close to its market close price -- at $28.44 when the call ended, only up nine cents. Not much love for beating expectations.