Microsoft's Cloud Buoys Earnings
October 20 2016 - 5:00PM
Dow Jones News
Microsoft Corp.'s cloud business is growing fast enough to
offset stalling revenue from its Windows workhorse.
The software giant's posted solid gains in its Office 365 and
Azure cloud-computing service in fiscal first quarter, even as
Windows revenue growth was flat. That helped the company easily top
Wall Street's adjusted earnings and revenue expectations.
Shares rose 5.2% to $60.20 in recent after-hours trading.
Revenue at the Redmond, Wash., software giant's intelligent
cloud segment, which includes its Azure on-demand computing
services, rose 8% to $6.4 billion, or 10% when adjusted for
currency fluctuations. The productivity and business processes
segment, which includes Microsoft's Office franchise, sales climbed
6% to $6.7 billion. In constant currency, revenue grew 8%.
Windows revenue from computer makers was flat in the quarter.
That's better than the world-wide PC market as a whole, which slid
3.9% in the quarter that ended in September, according to
International Data Corp. For the quarter, revenue from the more
personal computing segment, which includes Windows, as well as
Microsoft's mobile phone and gaming businesses, fell 2% to $9.3
billion, or a 1% decline in constant currency.
Gaming revenue fell 5% from the year-ago period, driven by lower
revenue from sales of Xbox consoles. The figure includes sales of
the Xbox console, Xbox Live subscriptions and transactions, as well
as game and accessory sales.
Over all, Microsoft posted $4.69 billion in first-quarter net
income, or 60 cents a share, compared with a $4.9 billion profit,
or 61 cents a share, a year ago.
Excluding the impact of revenue deferrals and restructuring
charges, adjusted earnings were 76 cents. Revenue rose 0.4% to
$20.45 billion and was $22.33 billion on an adjusted basis.
Analysts surveyed by Thomson Reuters expected Microsoft to
report adjusted earnings per share of 68 cents on sales of $21.7
billion.
Write to Jay Greene at Jay.Greene@wsj.com
(END) Dow Jones Newswires
October 20, 2016 16:45 ET (20:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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