Microsoft earnings better than analysts’ expectations

Microsoft sold 4.5 million Lumia Windows phones in its most recent quarter, compared to the 10.5 million last year, so phone revenues are down almost 50% year-on-year.

As such, though Microsoft’s smartphone business is not dead as yet, it apparently is heading towards a possible end.

Whatever the reasons, Microsoft sold just 4.5 million Lumia phones over the last quarter, compared to 10.5 million shipped one year ago.

Microsoft’s fiscal second-quarter 2016 results were buoyed by success of its cloud services, and an increase in the once stagnant Surface tablet sales, but the software giant still gets no love in the mobile phone market.

Nadella also shared that Windows 10 was now powering more than 200 million devices, a number that Microsoft hopes will hit $1 billion in the next few years.

“It was a strong holiday season for Microsoft, highlighted by Surface and Xbox”, Kevin Turner, COO at Microsoft, said in the call. Revenue from its own Surface line of computers and tablets rose to $1.35 billion from $1.1 billion a year earlier. Microsoft’s commercial “cloud computing” service is now the industry’s second-largest, after Amazon’s.

Revenue from the company’s increasingly important “Intelligent Cloud” business, which includes products such as Windows Server and platforms such as Azure, rose 5 percent to $6.3 billion. The company’s cloud based service revenue grew 10 percent and its Azure revenue increased 140 percent.

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

After accounting for almost $2 billion in deferred revenue and a few hundred million more in restructuring and integration charges among other adjustments, Microsoft reported non-GAAP earnings per share of $0.78 and revenues of $25.69 billion.

Microsoft says Windows revenue from PC manufacturers is down 5% – beating the overall decline in the shrinking PC market, but still noteworthy.

Redmond, Washington-based Microsoft’s stock had climbed more than 26% in the past 12 months to US$52.06 (RM215.68) at the close of Jan 28, even as the broader market has dropped 5%.

Wall Street analysts had been predicting that Microsoft would report earnings of around 71c per share; in the event, the company reported 78c.

“Our commercial business executed well as our sales teams and partners helped customers realise the value of Microsoft’s cloud technologies across Azure, Office 365 and CRM Online”.