“We would have liked to have seen 7% to 9% growth”, said Dan Morgan, a portfolio manager at Synovus Trust, which holds Microsoft shares, said of cloud revenue.
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During the company’s quarterly earnings announcements, Microsoft talks immensely about what they refer to as “the intelligent cloud”.
Instead, revenue for the January-March quarter fell 6 percent to $20.5 billion, while profit plunged 25 percent to $3.76 billion.
The “commercial cloud” – the part of Microsoft’s business that officials are expecting to collectively hit a $20 billion annual run rate during Microsoft’s fiscal 2018, includes revenues from Azure; its Office 365 business services (Exchange Online, SharePoint Online, Skype for Business Online); Dynamics CRM Online and its Enterprise Mobility Suite (EMS).
Excluding one-time items, Microsoft earned 62 USA cents per share. On average, 29 analysts polled by Thomson Reuters expected earnings of $0.64 per share for the quarter.
In the earnings release, Microsoft CEO Satya Nadella noted that businesses are increasingly choosing Microsoft to help them transform their companies. Other factors affecting revenue included a huge 73 percent drop in revenue from the company’s Lumia smartphone sales compared to previous year, and the weakening PC market which saw Windows OEM revenue decline 2 percent in constant currency.
Research firm Gartner states that the company witnessed a 9.6% decrease in PC shipments in the first quarter of fiscal year 2016, on the back of an overall weak market.
“We believe enterprise deployments will continue to drive up the over 270 million monthly active devices running Windows 10”.
BENGALURU/SAN FRANCISCO – Microsoft reported results that fell short of analysts’ expectations, showing its high-profile cloud business can not quite make up for a slowing personal-computer market.
Things were slowing in Microsoft’s applications-as-service business, too. Revenue from its Surface devices was up to $1.1 billion, a 61% increase year on year.
Intelligent Cloud revenue inched up three percent to $6.1bn thanks to a 120 percent hike in Azure sales. It will take Microsoft from a company with Windows as its flagship to one that relies more on Office, Azure and the SQL Server database products; from a company that sells software for clients to install on their own PCs and in their own offices and data-centers to one that sells more services delivered in the cloud.
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But operating profit at Microsoft’s biggest division, More Personal Computing, which includes its Windows operating system, the Surface computer and its Xbox gaming system, rose 57% from the prior-year quarter to $1.65bn. “The number of Windows 10 devices is twice that of Windows 7 devices at the same stage of launch”, Nadella said.
