Industry & Business

Microsoft beats forecast on cloud demands

Microsoft beats forecast on cloud demands

January 29
15:43 2016

1022_MicrosoftTechnology corporation, Microsoft has reported quarterly revenue and profit that beat analysts’ expectations, driven by aggressive cost cutting and growing demand for its cloud products and services.

Microsoft chief executive Satya Nadella has focused on cloud services and mobile applications on slower growth in its traditional software business.

Companies moving much of their information technology off premises, part of the cloud-computing trend, proved a bright spot.

“The enterprise cloud opportunity is massive, larger than any market we have ever participated in,” Nadella said in a conference call.

Microsoft’s stock had climbed more than 26% in the past 12 months to $52.06 at last night’s close. Its shares rose 3% in after-hours trading.

Revenue from the “intelligent cloud” business, which includes products such as its Azure cloud infrastructure and services business along with other non-cloud products such as traditional servers, rose 5% to $6.3 billion.

Perhaps a better indicator of its cloud strength is what the company calls its combined cloud business, on track for $9.4 billion in annual revenue, Microsoft said.

That measure, which includes Azure plus other businesses like Office 365, is up 15% from the $8.2 billion revenue it estimated last quarter.

Total revenue, however, fell 10.1% to $23.80 billion, squeezed by a strong dollar as well as a weak personal computer market that has reduced demand for Microsoft’s Windows operating system.

On an adjusted basis, revenue fell to $25.69 billion but beat analysts’ estimates.

Microsoft generates more than half of its revenue from outside the US.

Revenue in the business that includes Windows fell 5% to $12.66 billion.

Windows revenue closely tracks sales of personal computers, which fell 10.6% globally in the December quarter from a year earlier, according to research firm IDC.

IDC said business should improve later this year as companies that had delayed replacing machines before upgrading to Windows 10 make the switch. Microsoft released Windows 10 in July.

The company said its net income fell to $5 billion, or 62 cents per share, in its second-quarter ended December 31 from $5.86 billion, or 71 cents per share, a year earlier.

Excluding items, the company earned 78 cents per share.

Analysts on average had expected a profit of 71 cents per share and revenue of $25.26 billion, according to Thomson Reuters.

Microsoft is an American multinational technology company headquartered in Redmond, Washington, that develops, manufactures, licenses, supports and sells computer software, consumer electronics and personal computers and services.

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