Microsoft Annual Revenue Falls, but Quarterly Profit Beats Expectations
July 19 2016 - 5:02PM
Dow Jones News
By Jay Greene
Annual revenue fell at Microsoft Corp. for the first time since
2009, as the software giant continues to shift its business from
the slowing personal computer market and server software sales to
cloud computing.
Still, shares rose 3.3% to $54.81 in recent after-hours trading
as per-share earnings easily beat analysts' expectations and the
company's cloud and productivity businesses posted revenue growth
for the quarter and year.
The Redmond, Wash., software giant registered $85.32 billion in
total annual revenue, down 8.8% from fiscal 2015. Sales have
dwindled as the company's flagship operating system, Windows,
continues to post sluggish growth. For the year, revenue from the
More Personal Computing segment, which includes Windows, fell 6.3%
to $40.46 billion.
For the fourth quarter, More Personal Computing segment sales
fell 3.7% to $8.9 billion, or a 2% decline in constant currency.
Revenue from computer makers rose 11%.
Microsoft is betting its future on cloud sales and, in that
business, the company reported big gains. The company's Intelligent
Cloud segment, which includes its Azure on-demand computing
services, rose 6.6% to $6.71 billion. The company said revenue was
hurt by currency by about 3%.
The Productivity and Business Processes segment, which includes
Microsoft's Office franchise as well as its Dynamics business
products, posted a sales gain of 4.6% to $6.97 billion. The
unfavorable currency impact for that segment was about 3%.
Microsoft said last week that it won't hit its target of one
billion Windows 10 devices in use by June 2018, blaming it on the
company's pullback from making smartphones that would have run
Windows 10. The company said last month that more than 350 million
devices ran the operating system.
Even with Windows challenges, Microsoft's Surface line of
computers remains popular. The company said Surface revenue
increased 9% in constant currency.
Microsoft posted $3.12 billion in fourth-quarter net income, or
39 cents a share, compared with a loss of $3.2 billion, or 40 cents
a share, a year ago. The year-ago results included $8.4 billion in
charges related to the company's struggling mobile-phone
operation.
Excluding the impact of revenue deferrals and restructuring
charges, adjusted earnings rose to 69 cents from 62 cents a year
earlier. Revenue slid 7.1% to $20.61 billion and was $22.64 billion
on an adjusted basis.
Analysts surveyed by Thomson Reuters had expected Microsoft to
report adjusted earnings per share of 58 cents and sales of $22.1
billion.
Write to Jay Greene at Jay.Greene@wsj.com
(END) Dow Jones Newswires
July 19, 2016 16:47 ET (20:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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