The company said it will pump cash into marketing, R&D and hiring in areas such as services, gaming, business intelligence, online services, high-performance computing, security, communications, VoIP, mobile, and IP television.

As a result, the firm is expecting to see a profit of $0.30 in its current fourth fiscal quarter, about 4 cents less than Wall Street analysts were, on average, expecting.

Microsoft reported profit for its third fiscal quarter ended March 31 of $2.98bn, compared to $2.56bn a year ago. That was $0.29 a share, up 6 cents on the year. Revenue came in up 13% at $10.9bn.

Excluding a legal charge, the earnings per share was $0.31, two cents less than analysts were expecting. Analysts had been expecting revenue of $11.04bn.

Microsoft blamed the profit miss on a variety of factors, including the larger than expected number of Xbox games consoles it ended up shipping during the quarter. The devices are not yet profitable.

Chief financial officer Chris Liddell also blamed an increase in marketing costs for new products, and an increase in the amount of revenue coming from its services business.

Microsoft intends to continue to invest heavily in marketing its forthcoming wave of new products, such as Windows Vista and Office 2007, which Liddell characterized as the most significant in a decade.

We appreciate we’re investing aggressively relatively to some of your models, but think it’s the right thing to do to drive growth going forwards, he told analysts when questioned about profit guidance for coming quarters.

The company’s MSN business has been closely watched since the company announced its Windows Live strategy – widely interpreted as Microsoft’s response to Google and Web 2.0 era – at the end of last year.

That unit saw revenue flat compared to the third fiscal quarter last year, at $623m. Liddell said the business is going through a bumpy transition from search-based advertising provided by Yahoo, to Microsoft’s own AdCenter, which now brings in 70% of that unit’s search ad revenue.

When asked if Live was receiving a big share of future investments, Liddell said the strategy is broad-based approach across multiple fronts. He added: I don’t think there’s any Trojan horse there we’ve not talked about, sitting below the surface.

The firm’s client business saw revenue up 8.5% at $3.16bn, while the server and tools business was up 5% at $2.65bn. The Office-focused information worker unit was up 2% at $3.11bn, while MBS was up 21% at $214m. Mobile was up 41% at $81m.

The launch of the popular Xbox 360 console cause the entertainment segment to experience 84% revenue growth. That division came in at over $1bn.

Liddell was quiet on the subject of possible marketing activities around the delayed launch of Windows Vista, which will not be available to consumer OEMs or retailers until after the busy December shopping period.

It had been speculated that Microsoft and/or its partners would offer some kind of discount or incentive to consumers wishing to buy an XP PC for Christmas and upgrade to Vista in January, in order to prevent a slow holiday season.

We will look at the shape of previous releases in terms of what seems the sensible thing to do for customers and partners as we get closer to release, but with that being nine months on we’re really not commenting, he said.