Published: Sun, April 30, 2017
Hi-Tech | By Grace Becker

Microsoft Surface sales slump amid revamped competition

Microsoft Surface sales slump amid revamped competition

As for Microsoft's Intelligent Cloud business, it reported an impressive 11 percent increase in revenues for the quarter ended March.

Microsoft Corp MSFT.O on Thursday 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.

"Our results this quarter reflect the trust customers are placing in the Microsoft Cloud", said CEO Satya Nadella in a statement.

Microsoft also shed light on other important financial figures to define the growth of their company.

Overall, Microsoft's revenue totaled $22.09 billion during the quarter. Microsoft will now need to focus on operating expenses and the costs of LinkedIn revenue to prove that its bet will pay off in the long term. Office commercial products were up 7 percent. Intel shares fell more than 4 percent in immediate after-hours trading.

As a result of the growth in cloud productivity solutions, revenues for Productivity and Business Processes grew by 22% (23% in CC) to $7.96 billion.

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

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Office 365 Sees Incremental Growth Quarter-Over-Quarter: Last quarter, Microsoft called out its consumer subscriber base of 24.9 million; this quarter, the consumer subscriber base reached 26.2 million users. It blamed this on increased competition and "product end-of-lifecycle dynamics".

Surface computer revenue dropped 26%. The Commercial Cloud annualized revenue run rate revenue exceeded $15.2 billion, and the company is on course to achieve a $20 billion annual run rate by fiscal year 2018.

This is why Microsoft would need to come out with the "Surface Pro 5", which CIO Today reports is possible to be announced during the company's Build developer conference.

LinkedIn, the professional social network acquired by Microsoft previous year for some $26 billion, contributed revenue of $975 million.

In response to questions about the impact of price cutting by rivals like Google and Amazon, Nadella said Microsoft can withstand it and still prosper by getting customers to use not just basic Azure computing and storage services but higher level (and pricier) database and Internet of Things (IoT) offerings as well.

Productivity and Business Processes reported revenue of $7.96bn (up 22%), Intelligent Cloud grew by nearly 11% to $6.76bn, but its Personal Computing division's revenue fell by 7.4% to $8.84bn. Microsoft acquired LinkedIn, which now has 500 million members, for $26.2 billion. Microsoft has been emphasizing higher-margin premium products such as databases and recently started building its own servers rather than relying on Hewlett Packard Enterprise Co, driving the cloud margins higher, analysts said. During the first quarter, when the More Personal Computing segment declined 2%, Windows OEM and Commercial revenues were flat, but Phone revenue declined 72% and Gaming also took a 5% hit.

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