Follow Us

We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message

Microsoft profit drops but devices, consumer products help results

The company suffers in comparison to the same period last year, but sales of tablets and Windows help it beat expectations

Article comments

Microsoft's profit dropped and its revenue was almost flat in its third fiscal quarter, during which the company replaced Steve Ballmer with Satya Nadella as CEO.

Revenue came in at US$20.40 billion, slightly down compared with revenue of $20.49 billion in last year's third quarter. Net income was $5.7 billion, or $0.68 per share, down from net income of $6.1 billion, or $0.72 per share.

However, Microsoft matched the revenue consensus forecast from analysts polled by Thomson Financial, and exceeded the earnings-per-share expectation by $0.05. Sales growth for tablets and Windows OS helped Microsoft beat expectations.

On a pro forma basis, which excludes certain one-time items like revenue recognition for several offers and deferrals from last year's third quarter, revenue increased 8 percent and earnings per share rose 5 percent.

"This quarter's results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world. We are making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions. Both position us well for long-term growth," Microsoft CEO Satya Nadella said in a statement.

Nadella was appointed to the CEO post in early February, before the halfway mark of the third quarter, which ended on March 31.

The Devices and Consumer division's revenue grew on a pro forma basis by 12 percent to $8.30 billion, while gross margin shrunk 1 percent to $4.71 billion. Some highlights were a 4 percent revenue increase in Windows OS sales to hardware vendors, and a 50 percent revenue increase in Surface tablet revenue to $500 million.

Microsoft also highlighted that Office 365 Home, the subscription-based version of Office for consumers, ended the quarter with 4.4 million subscribers, almost 1 million more than in the previous quarter, and that Bing's search ad revenue went up 38 percent.

Revenue for the traditional Office suite, sold via perpetual licenses, rose 15 percent, thanks primarily to sales in Japan. Combined with Office 365 Home sales, revenue for those consumer-focused versions of Office increased 28 percent.

The Commercial division's revenue rose on a pro forma basis by 7 percent to $12.23 billion, and gross margin rose 6 percent to $9.91 billion. The division's performance was helped by a more-than-100-percent revenue increase from Office 365, the cloud and subscription suite of server and desktop productivity applications for businesses, and by a 150 percent hike in revenue from the Azure cloud platform services.

Other highlights from the Commercial division include an 11 percent revenue increase in Windows volume licensing for business customers and "double-digit" revenue growth for collaboration and communication server products Lync, SharePoint and Exchange, as well as for the SQL Server database.

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.



Share:

More from Techworld

More relevant IT news

Comments



Send to a friend

Email this article to a friend or colleague:

PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.

Techworld White Papers

Choose – and Choose Wisely – the Right MSP for Your SMB

End users need a technology partner that provides transparency, enables productivity, delivers...

Download Whitepaper

10 Effective Habits of Indispensable IT Departments

It’s no secret that responsibilities are growing while budgets continue to shrink. Download this...

Download Whitepaper

Gartner Magic Quadrant for Enterprise Information Archiving

Enterprise information archiving is contributing to organisational needs for e-discovery and...

Download Whitepaper

Advancing the state of virtualised backups

Dell Software’s vRanger is a veteran of the virtualisation specific backup market. It was the...

Download Whitepaper

Techworld UK - Technology - Business

Innovation, productivity, agility and profit

Watch this on demand webinar which explores IT innovation, managed print services and business agility.

Techworld Mobile Site

Access Techworld's content on the move

Get the latest news, product reviews and downloads on your mobile device with Techworld's mobile site.

Find out more...

From Wow to How : Making mobile and cloud work for you

On demand Biztech Briefing - Learn how to effectively deliver mobile work styles and cloud services together.

Watch now...

Site Map

* *