Microsoft shares rose in after-hours trading as it reported strong growth in its cloud computing and mobile applications divisions.
Chief executive Satya Nadella has been focusing on cloud services and revenue for the division rose 5% to $6.3bn. However, profits for the three months to 31 December fell 15% to $5bn (£3.4bn) as the strong dollar and falling PC sales took their toll. Total revenue also slipped 10.1% to $23.8bn. Both numbers were better than analysts had expected.
NPD Group analyst Stephen Baker said: “People who think Microsoft is sliding into irrelevancy really need to re-evaluate how they see the company. They are a software-first company in a world that is increasingly about software.” Matt Howard, a venture capitalist at Norwest Ventures, said Microsoft had “nailed the cloud”. Mr Nadella said companies were using its cloud services to drive transformation. “Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices.”
The global cloud storage industry was worth almost $19bn last year, according to Research and Markets. The group estimates that will rise to $65bn by 2020. Microsoft’s decision to focus more on cloud services – where its competitors include Amazon, Google, IBM and Cisco – has helped it move away from the declining PC market. Microsoft’s revenue from personal computing, which includes the Windows business, fell 5% in the quarter to $12.7bn. (BBC News, 2016)