Microsoft Rides Cloud to a Strong Q3
Strong demand for the Azure cloud computing platform and business software helps the company beat earnings-per-share estimates.While mostly under the leadership of new CEO Satya Nadella, Microsoft beat Wall Street analyst estimates on the company's profitability for the third-quarter fiscal year 2014 ending March 31, 2014. Nadella took over as CEO from Steve Ballmer on Feb. 4. After market close on April 24, the software and cloud services giant announced that it had booked sales of $20.4 billion and posted net income of $5.66 billion, or $0.68 per share. Analysts were expecting earnings per share of $0.63. Revenue was nearly in line with estimates of $20.39 billion and was up 8 percent from last year after adjusting for various offers, deferrals and a fine levied by the European Commission, according to the company. Microsoft was charged $733 million (€561 million) in March 2013 by regulators over the company's failure to provide a browser selection screen on PCs sold in Europe. During an afternoon earnings conference call, which fell on the eve of the expected close of the $7 billion Microsoft-Nokia deal, Nadella briefly commented that the addition of the smartphone maker's personnel and technology "will enhance our device capabilities." He also reported "strong momentum in cloud services" and said Office 365 and Azure are "both performing extremely well."
Echoing the "mobile-first, cloud-first" theme that is emerging as an early hallmark of Nadella's tenure, the chief executive said in a statement that Microsoft is "making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions" and is well-positioned for long-term growth. Bing search revenue jumped 38 percent year-over-year and now accounts for 18.6 percent share of the U.S. search market. Office 365 Home has more than 4.4 million subscribers, approximately 1 million of which signed up in the third quarter.