Microsoft Sales Go Backward As Windows Phone Sales Slump 49%

While it’s still far from the company’s largest business, revenue from Surface devices grew 29 percent year on year to $1.35 billion on the back of good Surface Pro 4 and Surface Book sales.

Microsoft Corp (MSFT – Analyst Report) just released their second quarter fiscal 2016 earnings results, posting earnings of $0.78 and revenue of $25.7 billion.

Satya Nadella, Microsoft’s chief executive said: “Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas”.

This I suspect is better than expected, with Windows Phone exceeding 10 million devices sold a year ago, suggesting sales will once again be in the 5-6 million range.

This quarter, Microsoft’s Intelligent Cloud segment saw revenue jump 5 percent year over year to $6.3 billion.

Global shipments of new PCs declined 8.3 percent during the fourth quarter compared with a year earlier, the research firm Gartner recently reported.

The second quarter figures reveal how a significant proportion of the company’s revenues now come from cloud, with commercial cloud revenues exceeding $9.4bn.

“The thing that we notice…is that anyone who has moved to the cloud, there is a real opportunity to move to multiple workloads over time”, Nadella said of the growth of the Azure cloud computing and development platform.

Revenue in the business that includes Windows fell 5 per cent to US$12.7 billion. It is now on track for $9.4 billion in annual revenue $9.4 billion, up from $8.2 billion it estimated in the previous quarter. On a constant-currency basis, revenue grew 11% but slowed from the 14% growth it posted in the first quarter. 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.

In the company’s latest earnings results, which cover the last three months of the year, Microsoft reported a revenue rise of 2.7 billion USA dollars (£1.8bn) on the same period in 2014. The revenue of the Windows Phone business plunged 49% year-over-year. However, Xbox hardware revenue declined because of lower Xbox 360 sales, though the company did not provide specific numbers.