Microsoft Cloud Strength Highlights First Quarter Results
Microsoft said sales of its flagship cloud product doubled in its first quarter, propelling earnings for the first quarter. The company said sales from its flagship cloud product Azure, which businesses can use to host their websites, apps or data, rose 116 percent. Revenue for its broader "Intelligent Cloud" business rose 8.3 percent to $6.38 billion.
Profit excluding certain items was 76 cents a share on adjusted sales of $22.3 billion, the Redmond, Washington-based company said in a statement Thursday.
"We are helping to lead a profound digital transformation for customers, infusing intelligence across all of our platforms and experiences," said Satya Nadella, chief executive officer at Microsoft. "We continue to innovate, grow engagement, and build our total addressable market."
Earlier this month, Nadella said the company has spent $3 billion -- $1 billion in the past year alone -- on data centers in Europe to expand cloud services. He promised continued investments there, including new sites in France next year.
Elsewhere in the cloud business, paid users for the company’s Salesforce.com rival, called Dynamics CRM Online, grew more than 2.5 times. Overall, Dynamics product revenue rose 11 percent.
Worldwide PC shipments in the September quarter were a smidgen better than expected -- a decline of 3.9 percent, compared with a 4.1 percent drop in the prior period, researcher IDC said. Still, Intel saw its shares plummet by the most in nine months after a disappointing fourth-quarter sales forecast signaled lackluster demand for PCs heading into the holiday shopping season.
Microsoft in July admitted it won’t meet its goal of getting the Windows 10 operating system on 1 billion devices within two to three years of the 2015 release of the software. The company blamed the shortfall on the decision to all but exit the phone hardware business and insisted this year would be a good one for corporate adoption of the system.
Sales in the company’s More Personal Computing business, including Windows and Xbox, slipped 1.8 percent from a year ago to $9.29 billion. Microsoft also reported a new metric for gaming revenue for Xbox and PC, saying it was $1.9 billion last quarter.
Phone revenue declined 72%.
Microsoft expects to close the acquisition of LinkedIn and the sale of its entry-level feature phone business in the second quarter of fiscal year 2017, subject to regulatory approvals and other closing conditions.