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Microsoft results head for the clouds

Better than expected

Software giant Microsoft had better than expected results thanks to strong sales in the fledgling cloud-computing market. Redmond reported profits of $5.7 billion on revenue of $20.4 billion. The cocaine nose jobs of Wall Street, expected Microsoft to report revenue of $20.4 billion and a profit of $5.3 billion.

The company’s recent strong growth in business software sales held up. Commercial sales rose 7 per cent to $12.23 billion. And Microsoft’s consumer businesses—which includes software for retail PCs and its Xbox video consoles—were better than expected. Sales in those units rose 12 per cent to $8.3 billion.

Microsoft also saw big strength in its Office 365 business, which makes the Office suite available on a subscription basis both to business and consumers. Revenue for this business doubled from a year ago to an annualized $2.5 billion. The number of computers licensed to use the software, was up nearly 100 per cent as well.

Office 365 Home subscribers grew by 1 million uses to 4.4 million. That doesn’t include numbers from the launch of its Office for iPad subscription business. There were 12 million downloads of the product in a week. The company’s Microsoft Azure cloud platform saw revenue double. Its commercial business overall saw revenue grow 7 per cent to $12.2 billion. SQL Server, the big database program, had a 15 per cent increase in revenue. Microsoft flogged dive million Xbox One consoles since launch, and users spend 5 hours a day using the device, which can also stream movies and play DVDs.

However the results were a mixed bag, While promise in Microsoft's cloud offerings were good the Windows franchise is looking a little weak. Microsoft CEO Satya Nadella said in a statement that the results "demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world.” Microsoft is still pinning its hopes on Windows 8 and updates to its operating system, though consumers increasingly are buying tablets instead of PCs. Market researcher FBR expects PC shipments to dip 3 per cent this year.

Microsoft will close its $7.2 billion acquisition of smartphone maker Nokia today and reverse slippage from Microsoft in the US mobile market, where Windows-enabled smartphones are expected to nab 4.6 per cent this year, down from 4.8 per cent in 2013. The news sent Microsoft shares up nearly 3 per cent to $40.93 in after-hours trading on the news.

Last modified on 25 April 2014
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