Microsoft reports 10.1 percent fall in quarterly revenue

The company recently updated Bing’s logo and said it plans to grow the search engine through consumer adoption of Windows 10, as Bing powers all searches done through the operating system.

Microsoft shares rose more than 6% in after-market trading in response to Q2 figures that showed the company making good progress with its cloud-based products, even if revenues linked to the declining PC market were in reverse.

Like a friendly but persistent sales rep, Microsoft (MSFT) has a message for anyone who owns a personal computer: If you haven’t yet upgraded to Windows 10, the company highly recommends it.

Matt Howard, a venture capitalist at Norwest Ventures, said Microsoft had “nailed the cloud”.

Server products and cloud services revenue grew 10 percent in constant currency.

“Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas”, said Microsoft CEO Satya Nadella in the statement.

Microsoft also reported that revenues from More Personal Computing declined 5pc to $12.7bn. Including revenue deferred to future quarters, however, the company’s earnings would have been 78 cents a share.

Microsoft’s profit on that basis, for example, rose 8%. Global shipments of new PCs declined 8.3 per cent during the fourth quarter compared with a year earlier, the research firm Gartner recently reported. That segment, which also includes its Xbox videogame consoles and popular Surface Pro, posted a 2% decline in revenue excluding currency impacts.

Intelligent Cloud (IC), which includes service revenue and Enterprise Services: $6.4 billion compared to $5.9 billion in the last quarter.

Perhaps a better indicator of its cloud strength is what the company calls its combined cloud business, on track for $9.4 billion in annual revenue, the company said.

By most analysts’ estimates, Microsoft is in second place in the most prominent segment of the cloud services market – in which computer storage and other services in data centres are rented to customers – after Amazon. The company reported revenue of $26.5 billion and EPS of $0.71 in the year-ago quarter. Microsoft has previously predicted that its cloud revenue will rise to $20 billion in 2018. Ahead of Microsoft’s earnings, Raymond James analyst Michael Turits estimated that Microsoft’s Azure business would hit $501 million in revenue in the December quarter.