Operating income was $5.3 billion, a 20 percent drop, net income was $3.8 billion, down 25 percent, and earnings per share were $0.47, a 23 percent decline.
Advertisement
Microsoft shares slipped in after-hours trading after the company’s quarterly profit fell short of analysts estimates.
“Organizations using digital technology to transform and drive new growth increasingly choose Microsoft as a partner”. Analysts expected the firm to report $6.28 billion in revenue from that segment, according to StreetAccount. In this group, Microsoft compiles revenues from products and services of Azure (public cloud), private and hybrid servers.
Many investors gauge Microsoft’s cloud strength by looking at what it calls its commercial cloud, a separate measure that includes cloud businesses such as Azure and Office 365 software.
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. The company reported that Windows OEM revenue declined by 2% year-over year. Consumer subscribes have almost doubled, from 12.4 million to 22.2 million.
Cloud business of Microsoft continue to show positive signs with Azure revenue growing by 120 percent, and usage of Azure compute and Azure SQL database more than doubling year over year.
CEO Satya Nadella said: “Azure saw double-digit growth for the seventh straight quarter”. Furthermore, the Intelligent Cloud business increased 3 percent, but the phone division fell no less than 46 percent in constant currency. The company has stepped away from focusing on phones, and its handset sales revenue fell by nearly half in the first quarter. Revenue for Office 365 is up 63 percent in constant currency on the commercial side, while commercial Office products and cloud services revenue is up seven percent. But in the previous quarter, the same segment grew 5%. Last week, Gartner said PC sales fell almost 10% in the first quarter of 2016.
Microsoft’s tablet device, Surface, experienced a revenue increase of 61% in constant currency, driven by Surface Pro 4 and Surface Book.
Microsoft states that Windows 10 is now active on over 270 million devices.
Advertisement
Mobile division revenue declined a whopping 46%, as the company managed to sell only 2.3 million Lumia smartphones. Clearly, it’s strategically important for Microsoft to have a stake in the mobile world, but unless it can start to achieve growth this year, it’s hard to see Windows having a future as a phone operating system.
