Microsoft Corporation on Thursday reported revenue and profit above Wall Street expectations, as sales of its hardware and cloud-computing services helped to offset a decline in the company’s core Windows business, according to Reuters.
“The company beat across the board,” said FBR Capital markets analyst Daniel Ives. “The Wall Street will cheer these results as it appears Microsoft is back on the right track after a head-scratching performance last quarter.”
Sales of Windows to computer manufacturers to install on new PCs fell 19 percent in the quarter, reflecting a sharp dip from a year ago when Windows got a brief boost from consumers rushing to buy new machines after Microsoft stopped support for the 14-year-old XP operating system.
That decline was offset by higher revenue from its Surface tablet, back-end server software and cloud-related offerings such as its online Office 365 suite of applications.
The company said its commercial cloud-related revenue for the quarter more than doubled, and was now running at $6.3 billion a year.
Microsoft’s overall revenue rose 6 percent to $21.7 billion, above Wall Street’s average forecast of $21.1 billion, according to Thomson Reuters.
Taking out the effects of the strong US dollar on currency rates, Microsoft said revenue would rise 9 percent.
Microsoft’s Mobile, formally Nokia Oy of Finland, has been the poor relation of the group’s wider upswing in performance. After buying the Finnish firm last year, the group has struggled to grow its mobile division’s share even after a barrage of new affordable phones aimed squarely at mid-income economies like India and China.
When you add both the cloud and mobile divisions together their combined revenues represented 23.2 percent of this quarter’s total, and they contributed 11.7 percent of the quarter’s total gross margin – which are positive indicators generally that Satya Nadella is winning over a skeptical user base.
Nevertheless, the lackluster performance of Microsoft Mobile hasn’t dented investors’ confidence in the company. With Microsoft Windows 10 currently in Beta form, revues from the cross-platform operating system seem generally positive. It is likely that if the current trend continues, Microsoft along with its cloud and Mobile divisions may finally take a bite out of Google’s decade long dominance of the online industry.
