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Microsoft's Cloud Strategy pays off

cloud service is deteriorating, but the company is able to handle it through a shutdown of the software-based business, a…

cloud service is deteriorating, but the company is able to handle it through a shutdown of the software-based business, a key strategy to compete with market leaders

Amazon.com
Inc.

The strategy, called hybrid computing, where customers run software in their own data centers but also use cloud services, braked a 28% jump in Microsoft’s server products and revenue from cloud services in its first quarter of the budget.

Cloud computing business, called Azure, grew 76% &#821

1; still healthy but slowest growth since Microsoft began to reveal percentages of revenue almost three years ago. Microsoft does not reveal revenue figures for operations, but analyst Brad Reback estimated Azure revenues amounted to $ 2.69 billion for the quarter.

Azure’s size makes it difficult to maintain earlier growth levels, says Finance Manager Amy Hood in an interview Wednesday. “This is still a big company, and it is still growing very fast,” she said.

In comparison, Amazon’s market-leading cloud infrastructure business increased 49% in the previous quarter to $ 6.11 billion.

Microsoft’s intelligent cloud segment, which includes Azure and server products, grew 24% to $ 8.57 billion, about $ 300 million over analysts’ expectations. “This certainly shows Microsoft’s hybrid cloud force,” said Reback.

In total, revenue rose 19% to $ 29.08 billion.

Net profit increased 34% to $ 8.82 billion. Per company, the company reported a profit of $ 1.14. Analysts had expected 96 cents in earnings per share of $ 27.92 billion in revenue.

The Microsoft share fell by 5.4% to $ 102.32 on the market near Wednesday, almost 3% after hours when revenue and profits easily exceeded Wall Street forecasts. 19659007] One of the largest growth areas came from Microsoft’s gaming business, where revenues increased by 44%. Ms Hood identified the massive hit game “Fortnite” to drive that performance. Xbox software revenues increased by 36% – about half from Fortnite, she said.

Microsoft saw a little fallout from chip shortage longtime partner

Intel
Corp.

revealed last month because it fought to meet the demand for computers. Intel has been working to keep chips available for expensive computers that often run the most expensive versions of Windows, and it has helped keep revenue high, says Hood.

Revenues in the More Personal Computer, which includes Windows and Xbox, increased 15% to $ 10.75 billion. The Productivity and Business Processes segment, which includes the Office Productivity franchise, increased by 19% to $ 9.77 billion.

Azure and Office have performed Microsoft’s return to the list of top rated US public companies. Its shares have risen about 19% in 2018 and its market value of 785.56 billion dollars traces only Apple Corp. and Amazon.

Write to Jay Greene at [email protected]

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