MicrosoftSoftware giant Microsoft (MSFT) reported record revenue and 48% earnings growth on strong sales of the company's Windows 7 and Office products as businesses upgrade their systems after sitting on the sidelines during the recession.

But the solid results, which topped Wall Street expectations, failed to impress investors looking for a growth catalyst similar to Apple's (AAPL) iPad and iPhone 4, which have sent Apple shares soaring.

Microsoft announced sales of $16.04 billion, a 22% increase over last year. Net income soared 48% to $4.52 billion or $0.51 per share.

Tech Refresh is On, But What Else?

"It's a great quarter -- but does that matter?" Colin Gillis, analyst at BGC Partners, told Reuters. "We all knew the business refresh cycle was in place. This is the dilemma for Microsoft -- how do they get the stock moving again?"

Microsoft remains the dominant player in desktop computer software and systems worldwide but has not been able to translate its success to the Internet -- where Google (GOOG) has carved out the top search advertising business -- or smartphones, where Apple and Research In Motion (RIMM) reign supreme.

Investors pushed Microsoft shares down 0.5% in after-hours trading. Microsoft shares have bounced around $25 for the last three years, while Apple shares have increased by over 60% in the last 12 months.

Windows 7 Powers Revenue

"This quarter's record revenue reflects the breadth of our offerings and our continued product momentum," Peter Klein, Microsoft's chief financial officer, said in a statement. "The revenue growth, combined with our ongoing cost discipline, helped us achieve another quarter of margin expansion."

The company said it has sold 175 million new licenses for Windows 7, its latest operating system. Windows dominates the business software market and runs on over 500 million computers worldwide.

"We saw strong sales execution across all of our businesses, particularly in the enterprise with Windows 7 and Office 2010," said Kevin Turner, Microsoft's chief operating officer.

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