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Microsoft CEO claims four in five enterprise customers piloting Windows 10

The software giant posted lower than expected earnings and profits for the latest quarter, sending shares down more than 4% in after-hours trading. For the three months ending March 31, the company reported a net income of $3.7-billion on revenue of $20.53-billion, leading it to miss analyst expectations.

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Further revenue growth was seen in dynamics products and cloud services which grew by 9% in constant currency year-over-year.

Looking at the individual business segments, Microsoft’s More Personal Computing segment made up the lion’s share of revenue with US$9.5 billion, growing 1 per cent (up 3 per cent in constant currency). As with the server products, 6 percent constant currency growth in Windows subscription revenue was offset by a corresponding decline in transactional revenue.

For mobile, the news was mixed: The biggest loser was Microsoft’s phones, which saw a 46% decline in revenue.

Adjusted revenue of $22.08bn was just shy of the $22.09bn analysts had expected, according to Thomson Reuters.

However, Microsoft’s smartphone business continued to decline drastically, falling 46% on the same period in 2015, with the company still yet to release a flagship Windows Phone since the launch of Windows 10 last summer. Microsoft said the result was driven by sales of Surface Pro 4 and the Surface Book notebook.

CEO Satya Nadella said the company is seeing momentum across its cloud services and with Windows 10.

Notably, Azure remained significantly strong during the quarter, recording revenue growth of 120% year-over-year (YoY) in constant currency. GAAP revenue was $20.5 billion. Office 365, in particular, is rocketing, with revenues up 63pc.

The results raised concerns that Microsoft’s shift in emphasis towards its cloud-based businesses and away from its traditional PC businesses is stalling.

The results showed a 2% drop in revenue from Windows, the PC operating system which has been the core for Microsoft for years, despite a larger drop in PC sales.

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Phone revenue dropped 47% to $746 million and the number of units sold plunged 73% to 2.3 million phones sold. Microsoft also published the figures that showed what the real numbers for the company could have been had the impact of currency not affected them. “Microsoft has four significant digital brands with more than 100 million unique users monthly in the US”.

Microsoft earnings miss, revenue in line