Microsoft’s net income fell to $5bn, or 62c per share in its second-quarter ended December 31, from $5.86bn, or 71c per share, a year earlier.
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Analysts on average had expected a profit of 71 cents USA per share and revenue of US$25.26 billion, according to Thomson Reuters I/B/E/S.
Microsoft made a profit of Dollars 5 billion on USD 23.8 billion in revenue in the final three months of a year ago, it said, propelling the company’s shares about seven per cent when the earnings figures hit, before giving up some of the ground.
The drop in phone revenue dragged down Microsoft’s overall devices revenue by 26 percent compared with the previous year, despite Surface revenue of $1.35 billion, driven up 22 percent year over year by the launch of the Surface Book and Surface Pro 4.
Revenue in Microsoft’s closely watched Intelligent Cloud segment grew by 5% to $6.3 billion.
“We expect our commercial business to remain healthy, with an ongoing shift to annuity as new and existing customers adopt and use our commercial cloud services”, said Microsoft chief financial officer Amy Hood.
The future of Microsoft’s device business is left uncertain after its latest quarterly report revealed that sales of its flagship Lumia phones plummeted by more than 50 per cent in a year.
Microsoft’s revenue in Productivity and Business Processes, which includes Microsoft Office services, fell two percent, with Microsoft Dynamics revenue growing 11 percent in constant currency.
The most significant decline was a fall in phone revenue of 49% in constant currency. Office 365 now has 20.6 million subscribers.
“Businesses are also piloting Windows 10, which will drive deployments beyond 200m active devices”.
Although Microsoft said Xbox hardware revenue fell because of lower volumes of Xbox 360 sales, it wouldn’t get specific about the number of next-generation consoles it sold during the recent quarter.
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Microsoft has reported a five percent growth in its “Intelligent Cloud” division, which includes sales of its Azure public cloud services. Microsoft’s revenue from Surface rose 29%, with the ad segment up 21% and Xbox’s monthly active users growing 30%.
