Microsoft only sold 2.3 million Lumia phones over the last three months

Microsoft has re-iterated its belief in a mythical annual income of $20bn from cloud despite growth in Azure and its apps-as-a-service business slowing.

Revenues from the company's Azure platform grew by 120 per cent in constant currency, while Azure compute and Azure SQL database use also more than doubled. Enterprise Services revenue was up 11 percent (15 percent constant currency).

Over the past few quarters, Microsoft and other tech companies have reported significant impact from the high value of the U.S. dollar, and have offered equivalent financial figures that show what their numbers would have been had the value of foreign earnings not been eroded by this conversion.

Excluding one-time items, Microsoft earned 62 cents per share.

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.

As a result of this, shares of Microsoft fell almost by 5% in the after-hours trading. Revenue in the segment edged up 0.9% to $9.46 billion, while operating profit jumped 57%.

Here's how you can fix Windows 10 not storing wifi passwords. Microsoft attributed this growth to Surface Pro 4 and Surface Book sales, but of course it neglected to provide firm numbers for how many tablets and computers it sold in the last three months. Expectations among Wall Street analysts polled by Thomson Reuters was for revenue of $22.09 billion and earnings per share of 64 cents. This was driven by lots of new subscribers to Office 365 - the cloud-based version of the Microsoft productivity apps - those old favourites of Word, Excel and PowerPoint. As with the server products, 6 percent constant currency growth in Windows subscription revenue was offset by a corresponding decline in transactional revenue. "It remains clear we are one of the two leaders in the market".

"There's still a long ways to go in terms of the multiple-year transition in the company from a Windows and on-premise software company to a cloud, mobile and service-oriented company", Parakh said. Surface devices are strong sellers for the company, with over $1.1 billion in sales during the quarter.

Revenue for Microsoft was $20.5bn, down 6% over the a year ago with revenue from its Productivity and Business Processes unit growing by 1% to $6.5bn. Phone revenue dived 46 percent.

Microsoft posted revenue of US$20.53 billion (around $26.44 billion) for the quarter, down from US$21.73 billion year-on-year, with net income of US$3.76 billion down from US$4.99 billion. Those figures included a deferral of more than $1.5 billion in revenues related mostly to the July release of the new Windows 10 operating system, which represents a new model for how the company will distribute and update its flagship software.

Microsoft's best-known play in the cloud is Azure, a set of services for computing and storage as well as tools for software developers.

Source: Microsoft only sold 2.3 million Lumia phones over the last three months