Total revenue, however, fell 10.1% to US$23.80bil (RM98.66bil), squeezed by a strong dollar as well as a weak personal computer market that has reduced demand for Microsoft's Windows operating system. It's part of a multi-pronged strategy, along with a push to expand in "cloud" computing, that analysts say is driving the early stages of a financial turnaround, as evidenced by Microsoft's latest earnings report on Thursday.
Microsoft is still making a lot of money, but the company is doing it with Surface, Windows 10 and its cloud platform, and definitely not Windows phones.
Under Satya Nadella, the Redmond giant has developed and the stocks are back in the favour with the investors. Operating profit fell to USD 6.0 billion from USD 7.8 billion, and net profit dropped to USD 5.0 billion from USD 5.9 billion a year ago. On an adjusted basis, revenue fell to US$25.69bil (RM106.51bil) but beat analysts' estimates.
Nevertheless, the company's intelligent cloud group, which includes its Azure service, rose five percent to $6.3 billion. That measure, which includes Azure plus other businesses such as Office 365, is up 15% from the $8.2bn revenue it estimated last quarter.
Phone revenue declined 49 percent. This shift of critical workloads to Azure not only resonates with our long-term cloud migration thesis, but also signals strong customer preferences for Microsoft's offerings overall.
The revenue Microsoft gets from PC makers for Windows declined 5 percent in the quarter, excluding foreign currency impacts.
Nadella says he expects that growth in commercial cloud will come from spaces where Microsoft hasn't played so much before, such as Linux workloads, Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and mobile cloud. Microsoft shares were up more than 5 percent in after-hours trading. Office 365 now has 20.6 million subscribers, which was a major contributor to the success of the sales of Productivity and Business Processes (PBP), which rose to $6.7 billion in value, from $6.3 billion in the last quarter.
Windows phones have not been selling well and Microsoft is now seeing a decline in both its smartphone business - which had sales of 4.5 million - and its "dumb" phone business.
On the other side, revenue for Windows Surface devices increased 29 percent driven by the launch of Surface Pro 4 and Surface Book while online gaming "Xbox Live" monthly active users grew 30 percent year-over-year to a record 48 million. "Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices", added Nadella.
Source: Sales of Lumia handsets nosedive to 4.5m in Q4
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