Microsoft Corp. posted a 16 percent rise in quarterly profit but set a disappointing profit target for the upcoming quarters.

Microsoft said earnings will be hurt by increased investments for its software services business, accelerated Xbox 360 game console shipments and higher costs ahead of crucial new product releases.

Microsoft also predicted personal computer and server computer sales growth would slow in the fiscal year starting July 1. The company plans in the upcoming fiscal year to ship upgrades to its mainstay Windows operating system and Office business software suite.

Microsoft posted a net profit of $2.98 billion, or 29 cents per share, in its fiscal third quarter ended March 31, compared to $2.56 billion, or 23 cents per diluted share, a year earlier. Revenue rose 13 percent to $10.9 billion.

Microsoft Chief Financial Officer Chris Liddell said the higher costs and investments may weaken earnings and profit margins in the short term, but argued they are important for long-term growth.

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