Revenue slipped 4 percent to $8.9 billion during the fourth quarter, due in part to a 71 percent drop in phone sales. Analyst had a consensus of $0.58. With this new report, that number has now hit $12.1 billion, which Microsoft prominently highlighted in its earnings release.
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One such service is already benefiting.
Microsoft has invested heavily to reposition itself as an industry leader in cloud services, rivaling businesses like Amazon. Office commercial products and cloud services revenue grew 5%, heavily driven by the Office 365 side, while Office consumer products and cloud services grew 19%. The average Wall Street prediction for Microsoft’s fourth quarter 2016 revenue amounted to $22.1 billion, Reuters reported.
He highlighted that “the Microsoft Cloud is seeing significant customer momentum and we’re well positioned to reach new opportunities in the year ahead”.
Unlike some of its rivals, Microsoft has managed to impress investors with its progress in that transition into markets associated with Amazon.com’s Amazon Web Services and Google. Also up was Microsoft’s Intelligent Cloud revenue – climbing seven percent in the final quarter of its fiscal year to reach $6.7 billion.
The company’s sales of Windows 10 are recognized over a few years, an accounting practice created to make sales line up with the lifetime of the computer the software is installed on. It also offers cloud-based solutions that provide customers with software services and content over the Internet by way of shared computing resources located in centralized data centers. In the current period, Microsoft forecast unit sales of US$6.1 billion to US$6.3 billion.
Profit, excluding certain items, was 69 cents a share, Microsoft said Tuesday in a statement.
Microsoft may continue to prove itself as the dominant organization for enterprise cloud customers, but there will be several challenges outside the cloud space, particularly with Windows 10 and its mobile business.
Sales at the More Personal Computing division declined 4 percent (down 2% in constant currency) to Dollars 8.9 billion, while sales from Productivity and Business Processes grew 5 percent (8% in constant currency) to USD 7.0 billion.
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After last week’s concession that it would miss its projected Windows 10 installation promise for mid-2018, Microsoft execs were quick to let everyone know that the company is still on track on the cloud side of its business. Shares jumped as much as 4,7%. “We saw it more specifically in more developed markets”. Nadella, who announced the company’s largest-ever deal last month, striking a deal to pay $26.2 billion for LinkedIn Corp (LNKD.N), has staked Microsoft’s future on mobile and the cloud.
