Microsoft Disappoints but Surface Sales Provide Some Hope

Microsoft's Cloud division generated sales of $6.1 billion in the March quarter, up 3% from a similar quarter past year. Analysts on average had expected a profit of 64 cents per share on revenue of $22.09 billion, according to Thomson Reuters I/B/E/S.

"Organisations using digital technology to transform and drive new growth increasingly choose Microsoft as a partner", said Nadella.

Microsoft reported quarterly earnings missed analysts' expectations on Thursday, while revenues came basically in line.

Microsoft said that its Intelligent Cloud segment, which includes its lineup of Azure public cloud services, posted a revenue increase of 3% to $6.1 billion. But in the previous quarter, the same segment grew 5%.

As expected, Microsoft's Windows business suffered from the 11.5% drop in PC sales.

There's also been growth all-round in Microsoft's cloud services, with Office commercial revenue growing 7 percent and Office consumer revenue growing 6 percent.

Factoring out currency effects, revenue in the Intelligent Cloud, Productivity and Business Processes, and More Personal Computing segments rose 8%, 6% and 3%, respectively.

Microsoft Corporation (NASDAQ:MSFT) reported that enterprise adoption of its cloud-based Office 365 rose 57% in the March quarter.

However, revenue in the More Personal Computing group grew just 1pc.

Its Surface lineup continues to perform well, seeing an increase of 61% thanks to devices like the Surface Pro 4 and Surface Book.

As revenue from PCs and Windows has declined as a share of the company's overall revenue, Microsoft hopes to revive its fortunes by placing a big bet on software and mobile services delivered from the cloud. Earnings and revenues for the quarter fell short of analysts' estimates. "For phone we expect year over year revenue declines to deepen in Q4 as we work through our Lumia channel position".

Microsoft says Windows 10 is now running on more than 270 million machines, a healthy figure for software that was released only nine months ago.

The number of subscribers to Xbox Live, the games console's online service also increased, with active user numbers up 26% on past year to 46 million players, the company said.

However, Phone revenue declined by 46% in constant currency.

Amy Hood, Microsoft's chief financial officer told analysts on an earnings call, said the company expected continued growth from Surface products in the current quarter but warned that decreases in Lumia revenues would accelerate in the quarter.

Source: Microsoft Disappoints but Surface Sales Provide Some Hope