Microsoft rides cloud to 21% rise in earnings

SAN FRANCISCO: Microsoft Corp reported on Wednesday that quarterly profits rose on the back of its thriving cloud computing business which has become a core focus for the US technology giant.

Profits rose 21% to $10.7 billion in the recently ended quarter as revenue increased 14% to $33.1 billion compared with the same period a year earlier.

“The world’s leading companies are choosing our cloud to build their digital capability,” said Microsoft chief executive Satya Nadella.

Revenue from cloud services sold to businesses was up more than a third in the quarter to $11.6 billion, according to chief financial officer Amy Hood.

“Microsoft did for (the quarterly) earnings what it has done so many times before, and that is to crush it with cloud and SaaS growth,” said analyst Patrick Moorhead of Moor Insights and Strategy, using an acronym for software-as-a-service.

“I attribute this quite simply to the investments it has made in the cloud and its ability to uniquely serve the needs of multinational corporations.”

Meanwhile, revenue from its careercentric social network LinkedIn was up 25%, Microsoft reported.

Nadella has moved Microsoft to focus on cloud computing and other business services, helping the company’s valuation grow to $1 trillion and draw even with rival Apple Inc in terms of market value.

While the quarterly earnings, overall, beat market expectations, there was a sign that revenue growth in Microsoft’s cloud unit Azure might be slowing.

Revenue from Azure increased 59% in the quarter, but came in well below last year’s 76% growth.

Microsoft also reported that it saw no growth at Xbox gaming unit.

A reason is likely that the latest generation Xbox console that debuted nearly six years ago is poised to be replaced by a successor on the horizon.

Microsoft in June gave the world a first glimpse of a powerful next-generation Xbox that it aims to release late next year.

Xbox head Phil Spencer pulled back the curtain on “Project Scarlett,” a successor to the Xbox One that will give game makers “the power they need to bring their creative visions to life.”

The new Xbox was promised to be released in time for the Christmas holiday shopping season in 2020.

Xbox battles in the console gaming arena with Sony Corp, which is working on a new generation PlayStation.