[fm]: Microsoft profits fall but cloud success sends share price up

Microsoft's stock had climbed more than 26% in the past 12 months to $52.06 at Thursday's close, even as the broader market had dropped 5%.

Microsoft's net income fell to $5bn, or 62c per share in its second-quarter ended December 31, from $5.86bn, or 71c per share, a year earlier.

Revenue from the "intelligent cloud" business, which includes products such as its Azure cloud infrastructure and services business along with other noncloud products such as traditional servers, rose 5 percent to $6.3 billion.

It sub-headlines the results with a line commenting upon "cloud strength", and the Microsoft Cloud was indeed a top performer for the company, actually it was the only one of Microsoft's three business segments to enjoy overall growth (ignoring non GAAP constant currency figures). Excluding currency effects, revenues would have risen 3 percent and adjusted earnings 23 percent.

Demand for cloud services continues to skyrocket.

Cloud services are going so well for Microsoft that Business Insider suggests it is growing faster than Amazon's reported 127% in revenue gain.

Revenue from Office 365, which increased almost 70% year over year, accounted for the constant-currency revenue growth in this division.

This quarter also brought major changes to Dynamics, where revenue grew 11% year over year when measured in constant currency.

Q2 continued to reflect the power of Nadella's focus on cloud, which has consistently been a strong source of revenue for the company. The Intelligent Cloud business grew five per cent thanks to its component successes; server and cloud services, Azure revenue and Enterprise Mobility Services. Office 365 now has 20.6 million subscribers. Search advertising revenue was up by 21 per cent in constant currency.

Azure revenue skyrocketed 140% in constant currency, with revenue from Azure premium services tripling from one year prior.

But the highlight was cloud services.

"The enterprise cloud opportunity is massive - larger than any market we've ever participated in", Nadella said on a conference call to discuss the financial results.

The most significant decline was a fall in phone revenue of 49% in constant currency. OEM revenue fell 5% but still came out ahead of a struggling PC market.




Review: Emerging Market Formulations & Research Unit, Flagship Records. 

For The #FacebookTeam