Microsoft’s quarterly revenue falls short of estimates

An advertisement is played on a set of large screens at the Microsoft office in Cambridge, Massachusetts.
An advertisement is played on a set of large screens at the Microsoft office in Cambridge, Massachusetts.PHOTO: REUTERS

NEW YORK (REUTERS) - Microsoft on Thursday (April 27)  reported quarterly revenue that slightly missed analysts’ estimates, as robust demand for its cloud computing services failed to offset weak growth in its personal computing division.

The company’s shares fell 1.9 per cent to US$67 in trading after the bell.

Under chief executive Satya Nadella, who took the helm in 2014, Microsoft has sharpened its focus on the fast-growing cloud computing unit to counter a prolonged slowdown in the PC market, which has weighed on demand for its Windows software.

Revenue from Microsoft’s personal computing unit, its largest by revenue, fell 7.4 per cent to US$8.84 billion (S$12.3 billion). Analysts on average had expected revenue of US$9.22 billion, according to research firm FactSet StreetAccount.

The business includes Windows software, Xbox gaming consoles, online search advertising and Surface personal computers.

Surface revenue dipped 26 per cent in the quarter.

The lower-than-expected revenue in the personal computing division came amid an uptick in the PC market.

Worldwide PC shipments rose 0.6 per cent in the first quarter of 2017, seeing growth for the first time in five years, market research firm IDC said earlier this month.

Revenue from Microsoft’s “Intelligent Cloud” business, which houses server products and the company’s flagship cloud computing platform, Azure, jumped about 11 per cent to US$6.76 billion in the third quarter ended March 31.

Azure revenue soared 93 per cent in the quarter.

Azure competes with’s Amazon Web Services, the market leader in cloud infrastructure, as well as offerings from Alphabet’s Google, IBM and Oracle.

The company’s net income rose to US$4.80 billion, or 61 cents per share, in the third quarter ended March 31, from US$3.76 billion, or 47 cents per share, a year earlier.

Excluding one-time items, Microsoft earned 73 cents per share. Analysts on average had expected 70 cents per share, according to Thomson Reuters I/B/E/S.

Revenue on an adjusted basis climbed 6 per cent to US$23.56 billion, missing analysts’ average estimate of US$23.62 billion.

Microsoft said LinkedIn, which it bought for about US$26 billion, contributed US$975 million in revenue in the quarter.

Microsoft’s shares had risen 9.9 per cent this year through Thursday, eclipsing the 7 per cent gain in the broader S&P 500.