Microsoft beats analyst expectations, posts strong cloud growth
But phone hardware business continues to decline, quarterly earnings report shows
Microsoft beat analyst estimates with its third-quarter results, released last week, showing overall revenue of $21.7bn.
While its personal computing business remained sluggish, Microsoft's cloud software group and server programmes showed impressive gains, the company announced. Its commercial cloud revenue more than doubled for the seventh straight quarter. Sales reached $2.76bn - above the $2.66bn widely expected by analysts - and Microsoft claimed that its cloud business is now running at $6.3bn per year.
Shares rose by 3.1% to $44.70 upon the announcement, according to Reuters.
However, Microsoft still faced problems this quarter. Including costs related to restructuring and integration, profit was actually down on the year-ago quarter, from $5.66bn to $4.99bn. Analysts attributed this dip to the decline of Microsoft's Windows business - Windows Pro installations fell by 19% while non-Windows Pro installations fell by 26%.
This year's results were not helped by the fact that the Windows business was granted a bump last year, when Microsoft stopped supporting Windows XP, forcing many businesses and consumers to upgrade to newer versions of the operating system. This move was widely believed to have contributed to the levelling out of the overall PC market last year, but further declines have since been reported.
What's more, Microsoft reported a large write-down of its devices business, which it acquired from Nokia when the company was being run by former CEO Steve Ballmer. Phone hardware revenue fell to $1.4bn, though the worrying part was that the unit saw a gross margin of minus-$4m.