Microsoft has released its report on third-quarter earnings today, and they show record results.

Q3 revenue is reported at $16.43 for the quarter which ended on March 31st.  This is a 13% increase year-over-year.  More results:

Operating income, net income, and diluted earnings per share for the quarter were $5.71 billion, $5.23 billion, and $0.61 per share, which represented increases of 10%, 31%, and 36%, respectively, when compared with the prior year period. Diluted earnings per share included a $0.05 tax benefit primarily related to an agreement with the U.S. Internal Revenue Service to settle a portion of their audit of tax years 2004 to 2006.

“We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses,” said Peter Klein, chief financial officer at Microsoft. “Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications.”

Categorically, Microsoft delivered revenue increases in each division.  On the heels of Office 2010, Microsoft Business Division revenue grew 21% year-over-year.  Server & Tools revenue grew 11& year-over-year.  They report that Windows 7 remains the fastest selling OS in history with a very impressive 350 million licenses sold.

On the back of Bing’s expansion to 13.9% of the search share, Microsoft’s Online Services Division revenue grew 14% year-over-year.

The real star, however, is the Entertainment & Devices Division.  Fueled by Kinect sales, Xbox console sales and Xbox Live subscriptions, it grew 60% year-over-year.  They say that the Kinect is the fastest selling consumer electronics device in history.

Microsoft isn’t the only company to post strong quarter earnings.  Yesterday, e-commerce giant eBay posted very strong Q1 earnings of $2.5 billion in net revenue.

And with the PlayStation Network looking like it’ll be down for another week, maybe frustrated PS3 users will jump ship and switch to Xbox, who knows.  I guess we will see when Microsoft reports its Q4 earnings on July 21st.