In addition, Microsoft’s financial results for the reporting quarter have further revealed that the company’s revenue from smartphone sales plunged 53 percent, or $1.2 billion, during the quarter.
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However, Microsoft chief executive Satya Nadella claimed that Azure revenue grew by 140 percent during the quarter, thanks to new deployments from customers such as NTT DoCoMo, Honeywell and NASA’s Jet Propulsion Laboratory. Office 365 subscribers grew to 20.6 million, and Windows 10 is now on more than 200 million devices.
Its Productivity and Business Processes (PBP) business, which includes Office, consumer Office, and Dynamics posted revenue of $6.7 billion (£4.69 billion) compared to $6.3 billion (£4.4 billion) in revenue last quarter.
Microsoft’s net income fell to $5 billion, in its second-quarter ended December 31 from $5.86 billion a year earlier.
The US-based software major has made progress towards its goal of more than one billion Windows 10 monthly active devices.
Analysts on average had expected a profit of 71 cents per share and revenue of $25.26 billion, according to Thomson Reuters.
The company reported $25.7 billion in revenue, down 2% year-over-year.
Fortunately for the computing giant, its Surface, Windows 10 and cloud computing business remain strong. The launch of the Surface Pro 4 and the Surface Book pumped the revenue up to $1.35 billion, with a year-over-year increase of 29%. Nadella has shifted much of Microsoft’s focus to its cloud business, a decision that appears to be propelling the company forward in spite of declining revenue this past quarter. “The enterprise cloud opportunity is massive”.
In other segments, OEM Windows license sales were down 5 percent, outperforming the PC market’s overall decline but still not too encouraging.
However, Microsoft had successfully set investor expectations low enough and the company’s stock increased in late trading on the news. The More Personal Computing division was also down 5% from last quarter. Microsoft attributed this to a change in strategy announced last July. Excluding currency effects, revenues would have risen 3 percent and adjusted earnings 23 percent. CNBC has reported that a third of Fortune 500 companies opt for Microsoft Enterprise Mobility Solutions, marking its cloud products as gaining quick traction among Enterprise clients.
Revenue for Windows phones fell 49% year-over-year.
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One continuing drag comes from smartphones, a business Microsoft retooled after it wrote down about 80% of its disastrous $9.4 billion purchase of Nokia Corp.’s handset business.
