Microsoft bounces back to black on cloud business

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Office commercial products and cloud services revenue grew 5%, heavily driven by the Office 365 side, while Office consumer products and cloud services grew 19%. By way of comparison, Amazon reported that its cloud services were approaching a run rate of $10 billion in Q1, although Amazon Web Services really competes only against Azure (not the other Microsoft cloud services).

Azure revenue was also very healthy, more than doubling up with a rise of 102% year-on-year - and Azure compute usage also doubled.

Microsoft closed out its fiscal year on June 30, with $92 billion in revenue (non-GAAP) and $22.3 billion in net income.

Revenue was down 4%, or 2% in constant currency, in the category Microsoft calls "More Personal Computing", which includes some Windows revenue, Surface, Phone, Xbox Live and search.

Microsoft's profit was boosted this quarter by a more favorable tax rate.

Overall, the results were better than most forecasts and sparked an after-hours gain of more than 3 per cent for the company, which is seeking to shift its emphasis to cope with declining sales of personal computers.

Mr Nadella has refocused the company on cloud and mobile in the face of stagnation in its traditional PC-based Windows business.

Revenue for Microsoft's productivity and business processes division grew 5% to hit $7 billion, and the Office products had a profitable quarter.

Microsoft's cloud business was the primary driver behind this growth.

The CEO added that Microsoft Cloud has seen and continues to see significant customer momentum positioning Microsoft well to reach the new opportunities that lie ahead next year and beyond.

The earnings for Microsoft had $22.6 billion of non-GAAP revenue and $20.6 billion of GAAP revenue with a per-share non-GAAP profit of 69 cents per share and 39 cents per share for GAAP.

Sanford Bernstein analyst Mark Moerdler said Microsoft was finally making headway shifting Microsoft Office software clients onto subscription-based cloud services.

Microsoft said Tuesday it posted a profit of $3.1 billion in the just-ended quarter, swinging into the black a year after hefty charges from writing off mobile phone assets.

Microsoft in June agreed to buy professional networking service LinkedIn for $26.2 billion.

Microsoft admitted this week that its ambitious target to get Windows 10 running on one billion devices by 2018 is likely to be missed because of the failure of the smartphone business.

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