Microsoft results buoyed by cloud products, but profit drops

Commercial cloud revenue more than doubled, but consumer software sales were disappointing

Microsoft generated $2.3 billion in revenue last quarter from a business that didn't exist only a year earlier: phone hardware. Were it not for Nokia's old business, Microsoft would have been a poorer performer in the last three months of 2014, at least in terms of sales.

Microsoft's overall revenue for the quarter, the second of its fiscal year, was up 8 percent from the year before, at $26.5 billion, the company said Monday. That was higher than analysts had expected.

But restructuring costs and a tax adjustment led to a drop in profits. Microsoft posted net income of $5.86 billion for the quarter, down nearly 12 percent year-on-year. That was equivalent to $0.71 per share, matching the estimate of analysts polled by Thomson Reuters.

Microsoft will provide more details about the numbers later this afternoon. For now, figures for the company's Devices and Consumer Licensing segment look bleak, with the company reporting $4.2 billion in revenue from consumer licenses -- a 25 percent drop over the year-ago quarter.

The licensing revenue includes money from OEMs for the Windows operating system, as well as license revenue for Windows Phone, consumer editions of Office 2013 (as opposed to the subscription-based Office 365 Home Premium), and intellectual property for consumer products.

Azure and other cloud services for businesses like Office 365 and Dynamics CRM Online appear to be doing all they can to keep the company's growth strategy on track. Commercial cloud revenue more than doubled during the quarter, up 114 percent, and is now on an annualized revenue run rate of $5.5 billion, according to Microsoft.

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Tags Microsoftbusiness issuesfinancial results

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Scott M., Fulton III

IDG News Service
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