Microsoft's net income rose 24%, fueled by strong corporate and consumer demand for computers that run its software, as revenue climbed to $9.74 billion. The company also said it is accelerating a previously announced stock-repurchase plan, aiming for $19 billion in buybacks by the end of 2006.

MSN online service missed expectations for the quarter because of continued gains by rival Google.

Net income reached $3.14 billion, or 29 cents per share, compared with $2.53 billion, or 23 cents per share, a year earlier, which included a 3 cent charge for a settlement with Novell Inc.

Microsoft forecast revenue in the December-ending quarte

r of $11.9 billion to $12.0 billion and diluted earnings per share of 32 cents, or 33 cents. Analysts had expected revenue of $12.26 billion in the December quarter.

Microsoft shares fell 38 cents, or 1.5 percent, to $24.47 in after-hours trade

On a separate note, Bill Gates acknowledges to an Israeli newspaper that Google has become a fierce rival, but he's also quick to add that he's not afraid of the upstart search-technology giant.

"We do not fear Google, but there is intense competition between us," Gates told the dailyYediot Ahronot. His comments came while making a brief visit to Israel, where he met with Prime Minister Ariel Sharon and praised the country's contributions to the technology world.