Microsoft's quarterly results beat investor expectations

by Mark Tyson on 25 April 2014, 10:30

Tags: Microsoft (NASDAQ:MSFT)

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Microsoft published its latest quarterly earnings results last night. The corporation performed better than many Wall Street analysts had expected, making a net profit of $5.66 billion during the quarter. However the results still marked a 6.5 per cent decline compared to the same quarter last year. For Microsoft this is the third quarter of its fiscal year so will be referred to as Q3 in various charts, tables and quotes.

Looking at the positives first, Consumer sales including the Windows OS, Surface and Xbox games and consoles were up by 12 per cent. This is a good showing as the PC sales decline continues – or at least seems to be bottoming out. The next gen console sales are still going strong it would also seem.

Commercial revenue also grew, this time by seven per cent. The greatest boost in this operating segment was from Azure services which experienced 150 per cent revenue growth. Other commercial plus points were that Office 365 revenue doubled and Windows volume licensing revenue grew 11 per cent.

The decline of Microsoft's revenue figures compared with last year's Q3 performance are not such a worry as this time last year the company enjoyed a strong boost from one-time software upgrades, notes The Wall Street Journal.

"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," said Satya Nadella, CEO at Microsoft. He went on to indicate that Microsoft will be pushing ahead with "bold, innovative products that people love to use."

Microsoft is expected to complete the purchase of Nokia's mobile device business later today.

Devices and Consumer revenue grew 12% to $8.30 billion.

  • Windows OEM revenue grew 4%, driven by strong 19% growth in Windows OEM Pro revenue.
  • Office 365 Home now has 4.4 million subscribers, adding nearly 1 million subscribers in just three months.
  • Microsoft sold in 2.0 million Xbox console units, including 1.2 million Xbox One consoles.
  • Surface revenue grew over 50% to approximately $500 million.
  • Bing U.S. search share grew to 18.6% and search advertising revenue grew 38%.

Commercial revenue grew 7% to $12.23 billion.

  • Office 365 revenue grew over 100%, and commercial seats nearly doubled, demonstrating strong enterprise momentum for Microsoft’s cloud productivity solutions.
  • Azure revenue grew over 150%, and the company has announced more than 40 new features that make the Azure platform more attractive to cloud application developers.
  • Windows volume licensing revenue grew 11%, as business customers continue to make Windows their platform of choice.
  • Lync, SharePoint, and Exchange, our productivity server offerings, collectively grew double-digits.


HEXUS Forums :: 11 Comments

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“We are making good progress in our consumer services like Bing”

Does anyone actually use Bing?
Satya Nadella, CEO at Microsoft … went on to indicate that Microsoft will be pushing ahead with “bold, innovative products that people love to use.” Microsoft is expected to complete the purchase of Nokia's mobile device business later today.
Here's a suggestion … let the Nokia engineers lead phone products. I've seen too many comments that in the past Nokia's been able to do some really droolworthy products, then someone - marketing? - has watered them down into something a lot less impressive.
Despite having an admittedly pro-Nokia bias, I've been a lot more impressed with the Nokia Windows Phone than the HTC of similar cost. I've seen nothing from HTC or Samsung that'd persuade me to switch from Android to Windows Phone - on the other hand Nokia have some intriguing products.
Microsoft sold in 2.0 million Xbox console units, including 1.2 million Xbox One consoles.
So that's effectively 1 old Xbox for every 1.5 new ones? Seems pretty good going considering the drawbacks of the XBone. Still think they would have sold a lot more if they ditched the requirement to have Kinect and gave any method to be able to run some of the older titles.
Microsoft needs to go back to its roots and remember its not just an OS provider, its the other programs and services which will be its profitable lines again. Office for iPad finally being released must make up a large portion of those new 365 subscribers. How that was allowed to sit finished but unreleased for so long was silly.

A flip of this Apple; although doing very well at the moment should consider opening up itunes to android users in the same way it did to Microsoft Windows users. Why waste all those potential sales, particuarly when many android users are used to itunes on their desktop PCs.

So many analysts are predicting Microsoft tables and phones will start clawing huge portions of the market but I don't see why this should change yet. Premium users are still heading to iOS and other users to Android in huge numbers.The Slates started off firmly in the high end market and even when moved to budget to mid range didn't really shift.

As for the XBOX, even with a reduced price I think its rival the PS4 will still shift higher numbers. The bad PR and the reviews stating that only the PS4 could play all of its games at 1080p and beyond may mean this console war is already over.
walibe
Microsoft needs to go back to its roots and remember its not just an OS provider, its the other programs and services which will be its profitable lines again.
I'm not sure whether you're up to date, but Microsoft has been pushing the “apps and services” line for quite a while now … along with Cloud of course. In fact one commentator (might have even been MJF) has stated that the OS is merely the “initial fix” to get you drawn in to the whole Microsoft environment. Effectively MS Office is seen as the “best” office suite and that, in turn, has a big “runs on Windows” sticker - so you want Office and are forced to get Windows to run it on.
walibe
A flip of this Apple; although doing very well at the moment should consider opening up itunes to android users in the same way it did to Microsoft Windows users. Why waste all those potential sales, particuarly when many android users are used to itunes on their desktop PCs.
iTunes :yucky: Lord knows how they can “improve” it and make it worse. There's stuff like DoubleTwist already available to allow Android users to use their iTunes-hosted content, and I think Samsung used to be able to also import iTunes playlists etc. But allow an official iTunes client on Android - what's in it for them? They (Apple) would surely argue that if you want mobile iTunes then why not just “upgrade” to one of their phones? ;)
walibe
So many analysts are predicting Microsoft tables and phones will start clawing huge portions of the market but I don't see why this should change yet. Premium users are still heading to iOS and other users to Android in huge numbers.The Slates started off firmly in the high end market and even when moved to budget to mid range didn't really shift.
Don't agree with this. iPhone is widely perceived as either “expensive” or not as technically good as other high-end phones, hence comments along the lines that “buying an iPhone is a fashion statement”. Similarly there's been a lot of dissatisfaction with high-end Android phones just being “warmed over” versions of last years model. Slates were way over priced in my opinion - a severe, but hopefully not fatal, misstep by Microsoft.
Where I think Windows Phone could do well is in the low- to mid-range. There you have hardware restrictions and WP8 seems to do better with a tight hardware budget than Android does, (Apple doesn't want this kind of buyer).
walibe
As for the XBOX, even with a reduced price I think its rival the PS4 will still shift higher numbers. The bad PR and the reviews stating that only the PS4 could play all of its games at 1080p and beyond may mean this console war is already over.
Agree here - only the most hardened XBox fan would claim that the XBone launch was anything other than a disaster - just seemed to be a long series of missteps and retractions - e.g. remember that one that stated that the XBone always had to be connected to the internet for example?
I would admit to some bias towards XBox (two in the house), but even I'm thinking that if I go next-gen (unlikely since I've got a large XBox library) then it's a lot more likely to be PS4 than XBone. The price difference is a major factor, but I also like the look of the PS4 a whole lot more. At the end of the day, if I've got to start a game library afresh then I don't have any reason to be loyal to Microsoft. Hence my comment above - if there was a way of transferring my copies of CoD:MW, BF3, etc to XBone then that would have been a lot more attractive in my opinion.
Although MJF may think that, I really fail to see the evidence. I work in I.T security at the moment and can assure you the OS is Microsofts core business. The eco system that Apple so successfully built and now Google are far in advance of Microsoft and will remain so for some time. Paying developers to port apps to your store is a sign of trouble.

If Microsoft was serious about bringing users into its Eco system and driving apps and entertainment as it's core business, it would make Windows desktop free.

Let's not forget other ‘super powers’ of the I.T world have suffered badly, particularly HP and IBM who are both solutions providers for the most part not the consumer driven power houses we once knew, although HP is trying to address that (poorly).

I wish Microsoft every success as they help to keep me in employment and made a percentage of my qualifications possible, but you have to ask yourself where will they be in 10 - 20 years times.