Microsoft's (MSFT) profit fell 18 percent in the last quarter, partly because it deferred revenue to let summertime PC buyers get free upgrades to Windows 7, which launched Thursday.

The upgrade program meant that Microsoft counted only about half of its Windows Vista sales in the period. It will report the rest as customers upgrade to the new system.

PC shipments edged up in the July-through-September period after falling all year, but the industry remains far weaker than even a year ago.

Microsoft said Friday its profit dropped to $3.6 billion, or 40 cents per share. Revenue sank 14 percent to $12.92 billion.

If it counted the deferred Windows revenue, earnings would have increased 8 percent from last year.

The group that makes Office software also saw its revenue and profit drop.

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