Lumia letdown: Microsoft phone sales halved in just one year

Revenue from Microsoft Azure, which challenges cloud king Amazon Web Services, more than doubled while its overall "Intelligent Cloud" unit grew five percent to United States dollars 6.3 billion, according to the earnings report.

Q2 earnings were primarily driven by growth in cloud and Office 365, though it was also a strong quarter for the Surface lineup.

Microsoft's net income fell to $5bn, or 62c per share in its second-quarter ended December 31, from $5.86bn, or 71c per share, a year earlier.

Microsoft will be hosting an analysts call on the numbers at 1430pm PT (2230 UTC) with more details.

For a second straight quarter, after-hours markets responded positively to Microsoft financial results that seemed to miss analyst expectations using generally accepted accounting practices (GAAP), but looked stronger on an adjusted basis. The massive increase was due to the better sales performance of the Surface line of Microsoft, which returned $1.35 billion in revenue to the company in the last quarter for an improvement of 29 percent. Cloud-services revenue rose 5% to $6.3 billion for the period. CNBC has reported that a third of Fortune 500 companies opt for Microsoft Enterprise Mobility Solutions, marking its cloud products as gaining quick traction among Enterprise clients.

Microsoft's results come as the cloud services market is expected to hit $27.4 billion (£19bn) in 2016, according to Synergy Research Group. Even with the recent issues in the stock market, Microsoft's shares are up more than 28 percent compared to the last season, while shares in rivals like Apple, Oracle and IBM have declined by double digits. Microsoft says that both the Surface Pro 4 and the Surface Book helped achieve these figures, mostly because they both sold like hot cakes since their launch. Microsoft's PC revenue drop was 5% from a year ago, generating $12.7 billion, with the decline in revenue clearly slowing down from Q1 when it was down 17% year over year.

'Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices'. On the smartphone side of things, Microsoft's Windows Phone revenue fell 49 percent year over year. Office 365 now has 20.6 million subscribers.

Source: Lumia letdown: Microsoft phone sales halved in just one year