Microsoft 's fourth quarter profit rose nearly 40 per cent on a tax gain and strong demand for personal computers using its software, but forecast a weaker-than-expected revenue outlook.

The world's biggest software maker said net profit grew to $3.7 billion (€3.1 billion), or 34 cents per share, in the fiscal fourth quarter ended June 30th, up 38 per cent from $2.69 billion, or 25 cents per share.

The result included a 9 cents per share tax benefit, a 5 cents per share legal charge and a 3 cents per share charge for stock-based compensation.

Excluding those items, Microsoft said it had per share profit of 33 cents in the fiscal fourth quarter, beating analysts' average expectation for a profit of 31 cents per share.

The company, which employs almost 2,000 in the Republic, said revenue in the quarter rose to $10.16 billion from $9.29 billion on strong demand for PCs, the main driver of sales for Microsoft's Windows, Office and Server software products.

Yearly revenue grew 8 per cent to $39.79 billion, Microsoft's slowest yearly growth since going public in 1986.

Chris Liddell, who recently became chief financial officer at Microsoft, said that the company would return to double-digit revenue growth for the fiscal year to June 2006.

Meanwhile, Microsoft said yesterday that it would call its new operating system Windows Vista.

Windows Vista, formerly known by its code-name Longhorn, is scheduled to be launched in 2006, five years after Windows XP, the longest time lag between releases of the Windows operating system.

Microsoft has promised numerous enhancements to its flagship product, which runs on more than nine out 10 personal computers worldwide, including better security, graphics and computing over the web.

A beta, or test, version of Windows Vista will be released by August 3rd.