SEATTLE — At Microsoft, cloud computing is the future, and investors are happy as long as the company keeps delivering growth from it.þþMicrosoft did just that on Thursday when it released financial results for the last three months of 2016, reporting 4 percent growth in its overall earnings. As a bonus, Microsoft’s older Windows software business did not perform too badly either.þþFor several years, Microsoft has sought to shed its reputation as a stodgy seller of traditional software, highly dependent on the ups and downs of the personal computing market. The company misfired along the way as it competed head-on with Google in internet search and Apple in smartphones.þþBut under Satya Nadella, its chief executive, Microsoft has found success in moving its software businesses like Office to the cloud, and creating businesses to compete with Amazon in the booming market for hosting computing chores in data centers. Cloud computing represents one of the biggest shifts in technology, in which applications and other computing functions are handled in data centers connected to the internet, rather than locally.þþMicrosoft’s shares, which languished for years, are now trading near record highs. After its results were released, the company’s stock rose almost 1 percent to $64.27.þþMore recently, Microsoft completed its biggest acquisition, a $26.2 billion deal for LinkedIn, the professional social network, which it plans to use to improve its cloud applications. The quarter, which ended Dec. 31, was the first to include revenue from LinkedIn, though only a few weeks’ worth because the acquisition was not final until Dec. 8.þþFor the quarter, Microsoft reported net income of $5.2 billion, or 66 cents a share, compared with $5.02 billion, or 62 cents a share, during the period a year earlier.þþRevenue rose to $24.09 billion from $23.8 billion a year ago.þþWith adjustments to exclude results from LinkedIn and the impact of nearly $2 billion in deferred revenue related to its Windows 10 operating system, Microsoft earned 84 cents a share and revenue of $25.84 billion, exceeding the estimates of Wall Street analysts, who also excluded those items from their forecasts.þþThe average analyst estimate compiled by Thomson Reuters had called for Microsoft earnings of 79 cents a share and revenue of $25.28 billion.þþSales from the company’s Azure cloud computing business, which caters to businesses that want to move basic computing functions into Microsoft’s data centers, increased 93 percent from a year ago. Revenue for intelligent cloud, Microsoft’s name for the category that includes Azure, rose 8 percent to $6.9 billion.þþ“We know their cloud business is doing well,” said Christopher Voce, an analyst at Forrester Research. “They delivered on that front.”þþMicrosoft’s Office business also had strong results as more of its customers signed on to use a subscription version of Office 365 software. Revenue in the Microsoft category dominated by Office rose 10 percent to $7.4 billion.þþThe category also benefited from $228 million in revenue that LinkedIn brought in for Microsoft after the acquisition closed. LinkedIn showed an operating loss during that period of $201 million.þþOne of the biggest surprises of the quarter was a 5 percent increase in the revenue Microsoft received from personal computer makers for licenses to its Windows software. Windows revenue that Microsoft received from agreements with corporate customers rose by the same amount.þþThe personal computer market has been in a slump for years as buyers have shifted to newer categories of devices like tablets and smartphones. In the last three months of 2016, worldwide personal computer shipments fell 3.7 percent, according to Gartner, the technology research firm.þþBut Microsoft, which is based in Redmond, Wash., still occasionally outperforms the overall market, especially during a surge in sales of higher-end personal computers. In an interview, Amy Hood, Microsoft’s chief financial officer, said that corporations were increasing their deployments of Windows 10 on their personal computers and that innovative new machines aimed at consumers sold well.þþ“We’re feeling very good about growth in the PC segment,ÿ Ms. Hood said.þþ
Source: NY Times
