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Published: Sun, April 24, 2016
Economy | By Melissa Porter

Microsoft's Windows Phone results: Not pretty

Microsoft's Windows Phone results: Not pretty

Chief executive Satya Nadella is trying to boost Microsoft's cloud business.

Many investors gauge Microsoft's cloud strength by looking at what it calls its commercial cloud, a separate measure that includes cloud businesses such as Azure and Office 365 software.

And operating profits for the division dropped by 14 per cent, in part reflecting non-cloud products included under its umbrella, such as traditional server software.

This morning (Friday) the trend continued, with the Microsoft stock price opening down 6.7% from Thursday's close of $55.78. They were trading at $52.13 at 9:38 a.m.in NY.

Instead, revenue for the January-March quarter fell 6% to $20.5 billion, while profit plunged 25% to $3.76 billion. "In Q3 2015, Microsoft saw $21.73 billion in revenue and earnings of $0.51 per share". But the good thing here is that it doesn't seem to be affecting Microsoft's bottom line too much.

Microsoft has revealed its financial results for the third quarter of its 2016 fiscal year. Sales in Productivity, made up mostly of Office programs, will be in that same range. "Our team is just getting started - this is our first step of many in delivering Windows Ink to the world". Revenue in Intelligent Cloud grew 3% to $6.1 billion, with Azure revenue up 120%, though this is down from 5% and 140% respectively in the previous quarter. At the end of last quarter, that metric stood above $10 billion, Hood said.

The persistent weakness in one-time software purchases and the shifting tax rate shows the transition Nadella is attempting - away from the PC market and these kinds of sales - will be neither simple nor short. While sales of personal computers have been sliding for the last four years, Nadella has been working to make Microsoft less dependent on revenue from its flagship Windows operating system, used mostly on PCs.

Microsoft on Friday released Windows 10 build 14328 for PC and mobile to Windows Insiders participating in the Fast ring.

Windows OEM and phone revenue were both on a downtrend at the rate of 2 percent and 46 percent, respectively. Surface revenue grew 61% and search-advertising revenue was up 18%. Azure commands about 10 per cent of the $23 billion market, estimates Synergy Research, compared with AWS' 31 per cent.

Microsoft's third-quarter results reflected many of our long-term expectations for the firm: torrid growth in Azure, minimal declines in the Windows business, growing Surface shipments and widespread adoption of Office 365. Sales of Azure premium services like Active Directory in the cloud grew by triple digits for the seventh consecutive quarter.

 

 

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