Microsoft's shares surged after the company posted strong Q1 profits for fiscal year 2014.

On Thursday, October 24, Microsoft announced that its revenue for the quarter ended September 30 was $18.53 billion. The net income of the company was $5.24 billion with $0.62 as earnings per share, on revenue of $18.53 billion.

The company posted earnings of $4.7 billion, or 53 cents a share, on $16 billion in revenue for Q1 of fiscal year 2013. Profits for Microsoft were up by 17 percent when compared to the same period in fiscal year 2013.

Microsoft's earnings beat analysts' predictions who had forecasted the company to earn 54 cents a share on $17.8 billion in revenue.

"We saw strong focus across our teams, generating record first-quarter revenue even as we navigate a fundamental business transition. Our enterprise renewals were very healthy and our devices and consumer business continued to improve," said Amy Hood, chief financial officer at Microsoft. "We are making strategic investments in areas like technological innovation, supply chain management, and global cloud operations to build for the future and create long-term shareholder value."

Steve Ballmer, the Chief Executive Officer of Microsoft, said that the company's "devices and services transformation is progressing" and Microsoft will launch a wide range of products and experiences this fall. Ballmer also said that the upcoming Xbox One, Surface 2 and Surface Pro 2 and a gamut of Windows 8.1 and Windows Phone devices is already creating a big hype within many the consumer community.

During the quarter, the company also purchased Finland-based Nokia to increase its sales in the smartphones industry.

Revenue from Windows declined even though Windows Pro revenue increased in the quarter. The company also announced that Surface revenue grew to $400 million.

Microsoft also confirmed in its earnings call that revenue for its Devices and Consumer division also grew four percent to $7.46 billion. The growth was triggered with a 47 percent increase in search advertising revenue, which was driven by an increase in revenue per search and volume.

Commercial revenue, which includes the company's server division also rose 10 percent to $11.20 billion in Q1 of fiscal year 2014.

Microsoft's shares surged by 5.6 percent in the after-hours of trading to $35.60.