Microsoft has released its earnings numbers for the second quarter of its fiscal 2016.
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Windows revenue closely tracks sales of personal computers, which fell 10.6 percent globally in the December quarter from a year earlier, according to research firm IDC.
In other segments, OEM Windows license sales were down 5 percent, outperforming the PC market’s overall decline but still not too encouraging.
Revenue from the company’s increasingly important “Intelligent Cloud” business, which includes products such as servers and platforms such as Azure cloud infrastructure and services, rose 5 percent to $6.3 billion. Azure, Office 365, and the Microsoft Dynamics cloud enterprise software line also all saw at least double-digit revenue increases. Xbox Live monthly subscribers also grew by a substantial 30% year-over-year “to a record of 48 million”.
But Microsoft was buoyed by its surging cloud business, which is giving cloud leader Amazon a serious run for its money.
Unfortunately, though not unexpectedly, this earnings report ends on a low note with phone revenue declining 49% ( in constant currency). The company now has 200 million active devices running Windows 10, although only around 22 million of those are enterprise or education users.
Microsoft’s GAAP revenues for Q2 fell from $26.4bn a year ago to $237bn. Nadella claims that there is “real excitement” for coming Windows 10 deployments for business customers.
Chief Executive Officer Satya Nadella is trying to remake the company around cloud services, such as the Azure computing platform and the subscription-based Office 365, which are seeing strong growth.
The Xbox business was bolstered by the October release of Halo 5, the first new title since 2012 in Microsoft’s most successful game franchise.
Microsoft also returned $6.5 billion to shareholders in the form of share repurchases and dividends. “More than 70% of the Fortune 500 [companies] now have at least two Microsoft Cloud offerings”, he added.
The company said it will provide financial outlook when it holds a conference call with analysts later on Thursday.
With the ongoing increase in cloud demand, the company expects to further accelerate its investment in data centers and capital equipment for the remainder of the fiscal year, expanding geographic coverage and capacity.
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At the same time, the Surface division, which was so often criticized by analysts, experts, and users, managed to improve by 29 percent during the quarter, as the new devices, including the Surface Pro 4 and the Surface Book, sold like hot cakes during the quarter.
