Microsoft Has An Up-and-Down Financial Quarter

Microsoft’s 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. With more than 110 million active devices running Windows 10, the company claims it is well on track to reach 1 billion Windows 10 active devices. Part of that so-so growth was due to the strong USA dollar.

As has come to be expected, Office 365 revenue grew a staggering 70%, while Office 365 subscribers increased to 20.6 million in the last quarter, showing once again that they have a stronghold on the market. Sales for server products and cloud services revenue grew 10% in constant currency, while Azure revenue grew 140% in constant currency with revenue from Azure premium services growing almost 3x year-over-year.

However, investors were still reassured by the company’s cloud performance, which could suggest CEO Satya Nadella’s transformation plans are starting to pay off for the firm.

That comes as Microsoft’s best-known business-software for personal computers-continued to weaken.

It has proven a happy New Year for Microsoft, with profits of $6.3bn (up 8 per cent on the year) in its second financial quarter – driven largely by increasing revenues from its cloud business.

Looking ahead, Microsoft expects to see a further shift towards cloud and services in its revenue results for the current quarter.

The company’s phone revenue plummeted 49 percent when excluding foreign currency fluctuations as a result of the changes, which included cutting the number of smartphones it sells.

Microsoft reports in three segments, the largest being More Personal Computing, which is the division that produces the core Windows operating system and the Xbox video gaming system. On a constant-currency basis, revenue grew 11% but slowed from the 14% growth it posted in the first quarter. Xbox Live monthly active users increased 30% year over year to reach a new record of 48 million.

As with Apple and other United States companies operating internationally, “currency headwinds” took a toll on Microsoft’s earnings.

The global cloud storage industry was worth nearly $19bn past year, according to Research and Markets.