Microsoft this afternoon posted record revenue of $19.95 billion and profits of $6.63 billion for the critical December quarter, topping Wall Street's expectations as Windows 7 licenses reached 300 million units and the Kinect motion controller for Xbox 360 boosted the company's video-game business.

Earnings per share were 77 cents, compared with analysts' expectations of 68 cents.

In some ways, the results could help Microsoft defend itself against persistent criticism of its consumer products. The Redmond company said the positive reception for Kinect resulted in higher sales of Xbox 360 hardware, Xbox Live subscriptions and games for the Xbox 360 console. Revenue in the company's Entertainment & Devices Division rose 55 percent to $3.7 billion. Operating profits in the division were up 86 percent, to $679 million.

“The pace of business spending, combined with strong consumer demand, led to another quarter of operating margin expansion and solid earnings per share growth,” said Peter Klein, the company's chief financial officer, in the earnings news release.

Microsoft says it has now sold 300 million Windows 7 licenses, and the latest version of the operating system is running on 20 percent of PCs connected to the Internet.

But the actual Windows results for the quarter weren't quite so rosy. Windows and Windows Live revenues were down 30 percent, as reported. Results in that division a year ago were boosted by the launch of Windows 7 and revenue that had been deferred as a result of Windows 7 upgrade coupons. Adjusting the previous quarter for those factors, Microsoft says revenue in the division was up a modest 3 percent, roughly in line with the growth of the worldwide PC market.

That tepid result in the PC market was due in part to the rise of Apple's iPad. Microsoft is facing criticism for not yet fielding a strong Windows-based rival.

More to come, including a breakdown of divisional results.

Further reading: Microsoft's Form 10Q.