Microsoft announces its first earnings since huge Windows shakeup

Microsoft announces its first earnings since huge Windows shakeup

The software behemoth reported diluted earnings per share (EPS) of $0.95 on revenues of $26.8 billion.

Microsoft's commercial cloud business revenue rose by 58% to $6 billion; the margins improved as well to 57%. And they got them: Microsoft's cloud businesses posted huge growth for the quarter.

"Microsoft on the heels of Azure is gaining further steam in this massive secular cloud shift, and the results speak to that", said Daniel Ives at research firm GBH Insights.

Microsoft in the press release notes that the revenue for the quarter was $26.8 billion, an increase of 16% year-over-year, and net income was $7.4 billion.

In the company's Productivity and Business Processes division, which includes Office 365, revenue rose 17 percent over a year ago to $9 billion but was almost flat compared to last quarter. We are innovating across key growth categories of infrastructure, AI, productivity, and business applications to deliver differentiated value to customers.

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This transformation has led the $717 billion tech titan to lean away from legacy businesses and become a front-runner in high-flying segments such as cloud computing, artificial intelligence (AI), the Internet of Things (IoT) and business productivity tools.

Analysts had expected earnings of 85 U.S. cents per share. "Productivity and Business" sells the Office productivity suite and other software programs while "More Intelligent Computing" includes Windows PC license revenue and the Xbox gaming franchise.

Microsoft's chief financial officer, Amy Hood, remarked that "with consistent investment and strong sales execution, this quarter we achieved better than expected performance across all segments".

Despite the earnings beat, shares of the company stock fell 1% in after hours trading on the Nasdaq stock exchange.

The analyst expects that MSFT's More Personal Computing unit, which includes Windows, grew 5% in Q3 to $9.2 billion, amid stagnant growth in the PC market and a boost from corporate upgrades to 2015's Windows 10.

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