Profiting from continued strength in the PC market, Microsoft Thursday defied earnings misses by other software vendors and reported a 15% increase in revenue for the final quarter of its 2004 fiscal year.Profiting from continued strength in the PC market,\u00a0Microsoft Thursday defied earnings misses by other software vendors and reported a 15% increase in revenue for the final quarter of its 2004 fiscal year.The world's largest software vendor reported net income of $2.69 billion on revenue of $9.29 billion for the fourth quarter of its 2004 fiscal year, ended June 30. That compared to net income of $1.48 billion on revenue of $8.07 billion in the year-earlier period, the company said in a statement.Microsoft's fourth-quarter revenue came in ahead of analyst expectations of $9 billion, according to a consensus estimate compiled by Thomson First Call.Earnings per share were 25 cents\u00a0for the quarter, compared to 14 cents per share a year earlier. This year's figure included a 5 cents per share charge for stock-based employee compensation and a 2 cents per share tax benefit. The figure from a year ago included a 4 cents per share stock-based compensation charge and a 5 cents per share charge for the settlement of an antitrust lawsuit with Time Warner.All of Microsoft's groups met or exceeded company expectations, Microsoft CFO\u00a0John Connors said in a statement."All of our seven businesses are growing and in aggregate they generated revenue growth of $4.6 billion, or 14%, for the year," Connors said on a conference call after Microsoft announced its results."I think it is important to put that number into context. It is just a bit lower than growing a couple of Yahoos or two eBays. Both are fine companies; we grew nearly two new companies that size in (fiscal year 2004) revenue growth," he said.Encouraged by its fourth quarter results, Microsoft raised its revenue guidance for its 2005 fiscal year to between $38.4 billion and $38.8 billion, but it lowered its earnings per share forecast to between $1.05 and $1.08, including a stock-based compensation expense of about 16 cents.The drop in the earnings forecast is a result of the plan Microsoft announced Tuesday to share its cash hoard with investors. It will spend as much as $75 billion to pay out dividends and buy back shares over the next four years.In April, Microsoft predicted fiscal year 2005 revenue of between $37.8 billion and $38.2 billion and earnings per share of between $1.16 and $1.18, including a stock-based compensation expense of about 15 cents.Wall Street analysts polled by Thomson First Call had pegged Microsoft at earnings per share of $1.34 on $38.64 billion in revenue for the company's fiscal 2005 year, which started July 1.Revenue growth for the fourth quarter was primarily driven by continued strong PC and server shipment growth, Microsoft said. Additionally, the MSN Internet group saw an increase in advertising revenue and Microsoft benefited from the weak U.S. dollar, the company said.Microsoft also appears to be doing well in selling its much-critiqued Software Assurance (SA) software maintenance program and enterprise agreement licenses, which tie customers to a multiyear contract that includes software updates. For Microsoft such annuity licenses mean guaranteed revenue.Microsoft projected that between 10% and 30% of customers with expiring Upgrade Advantage (UA) contracts would buy SA. "So far we are tracking to the high end of that range," Connors said.Many Microsoft customers are nearing the end of their two-year UA contracts, purchased just before Microsoft retired that option on July 31, 2002. Because the next big wave of Microsoft products is not expected before 2006, many customers may skip the SA maintenance plan, one of the most expensive in the industry."We are pleased with this result and most of these customers have historically been license-only purchasers and we expected the majority of them would continue to buy this way from us in the future," Connors said.Of Microsoft's seven businesses , the Windows client and Office groups continue to generate by far the most profit. The client segment reported operating income of $2.06 billion for the quarter, up from $1.87 billion last year. The information worker segment, which includes Office, grew its operating profit from $1.48 billion to $1.96 billion.Microsoft's Server and Tools segment increased its profit substantially, benefiting from increased Windows Server sales. The group's quarterly operating profit came in at $567 million, up from $307 million last year.An increase in revenue from online advertising and paid search listings helped MSN turn a $35 million operating profit in the fourth quarter, compared with an $83 million loss last year, Microsoft said.Microsoft's remaining four groups reported quarterly operating losses.* Microsoft Business Solutions, which sells software that helps companies run their business, narrowed its loss from $73 million to $42 million.*\u00a0Mobile and Embedded Devices, which includes Windows Mobile software, reported a loss of $42 million, an improvement over $68 million last year.*\u00a0Home and Entertainment, which includes the Xbox game console, booked a higher loss of $339 million compared to $245 million last year.