Microsoft beats on top and bottom lines; stock pops

Microsoft Corp. (NASDAQ: MSFT) has just released its fiscal 2016 first quarter earnings report.

It is all down to Chief Executive Satya Nadella’s cunning plan to have the company focus to software and cloud services. Thomson Reuters had estimates of $ $0.59 EPS and $21.03 billion in revenues. As per that structure, Devices & Consumer segment was up 28% YoY to 2.3 billion, while its gross margin increased 106% to $0.6 billion.

If there was one other albatross around Microsoft’s neck, it was its “More Personal Computing” segment, which includes Windows licensing and phone hardware.

Revenue of around $US21.09 billion. “With financial discipline and strong execution, we grew operating income by 11% in non-GAAP constant currency”. Microsoft said Office 365 subscriptions increased to 18.2 million with 3 million added this past quarter.

Revenue from Intelligent Cloud rose 8% on an absolute basis, and 14% in constant currency, to $5.9 billion.

Nadella said Microsoft opened new revenue avenues by offering more services through the internet cloud. Meanwhile, customers of its Enterprise Mobility product lines doubled from past year to 20,000 total, with the install base up over six times over the same period.

After being static for a while now, the software giant Microsoft has seen its figures go through the roof, thanks mostly to its cloud technology. Dynamics revenue was up 12% in constant currency. The silver lining for Microsoft’s More Personal Computing unit, however, is that Windows OEM revenue out-performed the overall PC market.

Microsoft shares are up $2.66, or nearly 6%, at $50.69, in late trading. Phone revenue dropped 54 percent as the company continued to scale back that part of the business.

Microsoft’s server and cloud businesses did well.

But it’s also driving greater adoption.

“Cloud continues to be the Rock of Gibraltar for Microsoft as this was a source of strength yet again in the quarter”, FBC Capital Markets analyst Daniel Ives said.

Windows 10 has been the most popular and best-received Microsoft operating system update of the last several cycles.

Microsoft officials said during its October 21 first quarter FY2016 report that its search revenue, excluding traffic-acquisition costs, grew 29 percent, driven by higher revenue per search and search volume. Right now, Windows 10 is running on 110 million devices across the globe. Microsoft has been increasing its push of its search and advertising platform, especially with the arrival of Windows 10.