Microsoft hails software as driving force behind strong financial results

This helped offset a 49 percent in Phone revenue, a decline that Microsoft said reflected its “strategy change announced in July 2015”. Meanwhile, Microsoft reported that its success in monetizing its search advertising had grown by 29%, which it attributed to the integration of search into Windows 10. The company’s 4.5 million Lumia smartphones sold in the quarter compared to 10.5 million during the same period a year ago.

In the December quarter, revenue from the Intelligent Cloud segment, which offers Azure, server software, and Enterprise Services, increased 5% year-on-year (YoY) from $5.9 billion in the previous quarter to $6.34 billion.

Revenue in the business that includes Windows fell 5 percent to $12.7 billion.

Those peaks and valleys include growth in its cloud business, varied results on the productivity and business processes business, and declines in the unit that includes Windows OEM revenues and devices in its second-quarter results, the company reported Thursday. He claims that over 70% of the Fortune 500 businesses now use at least two different cloud services by Microsoft.

Under his leadership, Microsoft has been shifting its business towards cloud services, such as Microsoft Azure, Dynamics CRM and Office 365.

Analysts polled by Thomson Reuters had expected adjusted per-share profit of 71 cents and revenue of $US25.26 billion.

But Microsoft is also showing strength in its traditional business of operating systems for PCs, despite a declining hardware market.

In addition to the decreased interest in Windows, the slight fall in revenue has been attributed to shifts in currency, but the company is understandably pleased with the figures.

Microsoft’s cloud business is booming at a flawless time.

Total revenue, however, fell 10.1% to $23.8bn, squeezed by a strong dollar as well as a weak personal computer market that has reduced demand for Microsoft’s Windows operating system. Microsoft shares were up more than 5 percent in after-hours trading.

Microsoft also saw a boost with its Surface tablet and the Xbox game console in the holiday quarter.

For companies already relying on Microsoft Exchange and Outlook for sending and receiving email, information technology managers say, turning to the same company to handle that data in the cloud seems like a logical move.

“It’s just a really natural thing”, said Matt McIllwain, an investor at Madrona Venture Group, about companies starting their cloud transition with email and other widely used office software from Microsoft.