Retooled Microsoft gets earnings boost from cloud software

25 Oct 2015 | Author: | No comments yet »

Microsoft Corporation Stock Surges After Earnings Beat.

The company has released its financial report for the first quarter of the 2016 fiscal year, which ended September 30, 2015 and the numbers are quite the mixed bag.

The company reported that its “Intelligent Cloud” unit, which contains most of its business-focused infrastructure business, rose 8% this quarter to log $5.9 billion in revenue. With the dollar having grown stronger, Microsoft’s quarterly revenue got reduced by approximately $1.2 billion; where as its operating income and net income dropped by $0.69 billion and $0.65 billion. The Intelligent Cloud segment grew 8% (14%) to $5.9 billion as Azure revenue doubled, and sales of core server products also grew 9% in constant currency.

But, they make the argument that they did perform better than the overall PC market because the Windows 10 launch spurred PC ecosystem innovation and helped drive hardware mix toward premium devices. Azure’s revenue and usage has more than doubled in the past year, and Nadella noted that there were really only two players in the cloud game – both in Seattle. Although Microsoft’s single-digit share of the smartphone market remains persistently low, there’s little chance of the company ceding the market completely to Apple iOS and Google’s Android mobile operating system, said Gillett. Investors were pleased to know Microsoft’s cloud business continues to grow enough to forgive the declining revenues in the Surface and Lumia divisions.

That included a 70 per cent increase in revenue from commercial cloud computing, as well as a “hefty” increase in the number of people paying for the Xbox Live online gaming service and for Office 365. The company is aiming to garner revenue by selling related apps, videogames, Web-search ads and other add-ons, regardless of whether Windows 10 spurs people to buy updated PCs.

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