Microsoft's doing well, but Lumia smartphone sales are tanking

Microsoft has unveiled its financial results for the third quarter of fiscal year 2016, reporting a net income of $3.8 billion (€3.3 billion) and revenues of $20.5 billion (€18.1 billion). Largely driven by offerings like Office 365 and Dynamics CRM and ERP, the company's Productivity and Business Processes segment generated $6.5 billion in sales, a 1 percent year-over-year increase, or 6 percent using constant currency calculations that account for currency fluctuations. Gartner and the International Data Corporation both recorded steep declines in the global PC market in the 2016 first quarter.

The company also reported a 61 per cent gain in revenue for Surface, the company's branded tablet system, fueled by the introduction of Surface Pro 4 and Surface Book.

"We're seeing great traction with businesses who want to bring Microsoft's cloud, mobile device management technology and data analytics together to improve security and productivity resulting in nearly 70% year-over-year growth in our commercial cloud run rate", Kevin Turner, chief operating officer at Microsoft, said in a news release. Office consumer products and cloud services grew by 6% in constant currency, with Office 365 consumer subscribers increasing to 22.2 million in number. "The intelligent cloud" chiefly comprises Microsoft's products and services under the Cloud & Enterprise domain, including Windows Server, SQL Server, System Center, Azure, and Enterprise Services.

But Windows OEM sales dropped 2%. Intelligent Cloud revenue growth is slowing, and phone hardware revenue was almost cut in half as well. Meanwhile, Office 365 is becoming a growing platform for developers, as are other parts of the business such as Skype, he said.

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

Microsoft Corp (MSFT.O) reported results that fell short of analysts' expectations, showing its high-profile cloud business can not quite make up for weakness in its core PC market.

This morning (Friday) the trend continued, with the Microsoft stock price opening down 6.7% from Thursday's close of $55.78. However, the company missed those marks by significant margins, posting instead only 47 cents per share in earnings and revenue of $20.5 billion. Microsoft Office emerged to be a standout performer in the segment after revenue from the consumer product increased 3%.

Microsoft only sold 2.3 million Lumia phones last quarter.

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

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Source: Microsoft's doing well, but Lumia smartphone sales are tanking