Microsoft gets cloud boost, but PCs are still a drag
Tech giant’s profit doubles as stock price hits record
Microsoft closed its fiscal year with a bang Thursday, notching $6.5 billion in profits in the June quarter, double from the year-ago period.
Revenue from cloud computing again drove the quarter, up 11% to $7.4 billion.
Another predictable factor over the past three months was continued drag from personal computing, down 2% to $8.8 billion, weighed by sales of its Surface hardware.
Overall, sales rose 13% to $23.3 billion. Microsoft reported impressive commercial growth in Office 365 (up 43%) and its Azure cloud unit (up 97%). LinkedIn, the professional social network it bought last year, added $1 billion to sales.
Microsoft stock has been riding high of late, blowing past the $68 mark notched this time last quarter. Shares closed up 0.49% at $74.22 Thursday, a record. Shares jumped 3% in after-hours trading.
“These are very positive signs of just how much progress the company is making in newer product segments,” says Patrick Moorhead, president of Moor Insights & Strategy.
“Surface declined, but not nearly as much as it had the prior quarter, indicating their product refreshes are doing well. I’m expecting an uptick in Surface the next quarter,” Moorhead says.
The earnings report comes a few weeks after the Redmond, Wash.-based tech giant announced that it would be cutting thousands from its global workforce of 120,000 as part of reorganization aimed to focus its efforts on a growing cloud sales business.
Microsoft’s Azure commercial cloud is second only to Amazon Web Services and has been gradually closing the gap on its crosstown rival as CEO Satya Nadella continues to pivot Microsoft from a licensing- to a subscription-based model anchored to its suite of Office 365 products.
The company reported fourth-quarter adjusted earnings per share of 98 cents on adjusted revenue of $24.7 billion.
Those numbers blew past analyst EPS expectations of 71 cents and beat adjusted sales estimates of $24.3 billion, according to S&P Global Market Intelligence.
“These are very positive signs of just how much progress the company is making in newer product segments.” Patrick Moorhead, president of Moor Insights & Strategy