Microsoft’s quarter solid, thanks to cloud computing

[ad_1] Microsoft on Wednesday gave one other strong quarterly report card to Wall Avenue, because it plows forward in promoting its cloud computing providers to large companies and the federal government.

The corporate reported fiscal second-quarter revenue of $11.6 billion, up 36% from the identical interval final yr.

Web revenue of $1.51 per share beat Wall Avenue expectations.

The software program maker posted income of $36.9 billion within the October-December interval, up 14% from final yr and in addition beating forecasts.

Analysts polled by FactSet anticipated Microsoft to earn $1.32 per share on income of $35.7 billion for the October-December quarter. They're predicting a forecast of $1.24 in earnings per share on income of $34.1 billion for the January-March quarter.

Goldman Sachs analyst Heather Bellini mentioned in a observe to traders Wednesday that Microsoft’s Azure cloud computing enterprise has been rising sooner than the broader cloud market. Azure’s quarterly income grew 62% % from the identical time final yr.

Bellini mentioned the corporate’s subscription-based Workplace 365 office software program merchandise additionally stay “entrance and middle” as companies look to rework their digital operations.

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She said price increases that began in October 2018 are continuing to drive revenue, as are Microsoft’s moves to phase out older products such as Windows 7, which came out in 2009. Microsoft stopped providing free security updates for the legacy operating system earlier this month, forcing users to upgrade to Windows 10 if they don’t want to be vulnerable to malware and hacking.

Microsoft’s efforts to catch up to No. 1 cloud provider Amazon got a big boost in October when the U.S. Department of Defense awarded Microsoft a $10 billion contract to supply the U.S. military with cloud services for the next decade.

Amazon is protesting Microsoft’s award, saying President Donald Trump improperly influenced the bidding process, and asked the U.S. Court of Federal Claims this month to halt any substantive work while its lawsuit proceeds. The Pentagon wants Microsoft to start sooner, arguing that the computing project known as JEDI is urgently needed for national security.

The project, formally called the Joint Enterprise Defense Infrastructure plan, would store and process vast amounts of classified data.

<img class="gnt_em_cp_cw_i" data-g-r="lazy" data-gl-src="https://www.gannett-cdn.com/presto/2019/08/14/PNAS/612855cd-5801-4aee-aaee-3d1e3fa1db15-140416-a.JPG?crop=3776,2832,x316,y0&width=258&height=193&format=pjpg&auto=webp" data-gl-srcset="https://www.gannett-cdn.com/presto/2019/08/14/PNAS/612855cd-5801-4aee-aaee-3d1e3fa1db15-140416-a.JPG?crop=3776,2832,x316,y0&width=516&height=386&format=pjpg&auto=webp 2x" decoding="async" alt="https://www.usatoday.com/"> Mizuho analyst Gregg Moskowitz said in a note that the JEDI cloud contract was a game-changer for Microsoft that goes beyond its likely $10 billion in revenue over the next decade. He said it could also serve as a template leading to broader adoption by other government agencies and business customers.

Microsoft’s Surface hardware business grew by 6% from the same time last year after the company launched new laptops and tablets in the fall. But another consumer business, the Xbox gaming system, experienced a 11% revenue decline as Microsoft’s gaming division prepares to release a new console later this year.

Revenue from the company’s professional networking service, LinkedIn, grew by 24%.

Microsoft CEO Satya Nadella celebrated the strong profit and revenue in a statement Wednesday, while also calling attention to the company’s work “to ensure the technology we build is inclusive, trusted and creates a more sustainable world.”

Nadella pledged earlier this month that by 2030 the company will be removing more carbon from the environment than it emits. To get there, the company said it plans to cut emissions from its business and supply chain, while helping to fund the development of new technology to remove carbon from the air.

Shares in Microsoft Corp., which is based in Redmond, Washington, rose $5.54, or 3.3%, to $173.58 in after-hours trading following the release of the earnings report.