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Cloud Business Helps Microsoft Post Strong Results

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Microsoft on Thursday posted fiscal second-quarter results ahead of analysts’ estimates amid strong results from its cloud business.

The company posted $5 billion in net income, or 62 cents per share, on revenue of $23.8 billion. Excluding certain items, the company reported income of $6.3 billion, or 78 cents per share, on adjusted revenue of $25.7 billion. Analysts were expecting per-share earnings of 71 cents on revenue of $25.2 billion.

Microsoft, while often seen as not possessing the cool factor of Google and Apple, has nonetheless continued to top expectations in recent quarters amid strong sales to businesses.

The company said it will provide financial outlook when it holds a conference call with analysts later on Thursday.

Shares rose in after-hours trading, changing hands recently at $55.01, up $2.95 or more than 5 percent.

Among other highlights, Microsoft noted that:

  • Windows revenue from computer makers dropped 5 percent, though that was less than overall PC market decline.
  • Server products and cloud services revenue grew 10 percent on a constant currency basis.
  • Nearly 30 percent of search revenue in December was driven by Windows 10. Search advertising revenue overall grew 21 percent on a constant currency basis and the business remained profitable.
  • Microsoft’s devices business saw mixed results as Surface revenue increased 29 percent in constant currency, while phone revenue fell by nearly half. Overall, sales fell 26 percent.
  • Office 365, the subscription version of Office, continued to grow with revenue up 70 percent, again on that constant currency basis, with consumer Office 365 subscriptions now topping 20 million.
  • The mobile version of Outlook, which stems from Microsoft’s 2014 Acompli acquisition, is now running on 30 million Android and iOS devices.
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