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July 22, 2014

The cloud keeps Microsoft afloat while it reconsiders hardware and content

by John_A

We always want to know how Microsoft is doing, but today we’re paying especially close attention: The company just released its earnings for its fourth fiscal quarter, the first full quarter that new CEO Satya Nadella was on the job. Also, let’s not forget that Microsoft just announced it’s cutting 18,000 jobs and axing Xbox Entertainment Studios. So how’d the company do? Not bad, actually: The company says revenue is up, mostly thanks to its strong cloud business (previously led by Nadella himself). In particular, Microsoft has its loyal business customers to thank: The company saw big gains in commercial cloud revenue, Windows licenses (natch) and server products. Other honorable mentions include Bing, which gained 40 percent in revenue; Microsoft Office 365 subscriptions; and revenue from PC makers.

Largely missing from the report: mentions of hardware. Though the company’s new mobile business helped revenue a bit, the company also had to take a $38 million hit on Surface inventory. Basically, then, there are few surprises here: Microsoft made the most money off its bread and butter — things like enterprise services, the cloud and its core Windows business. And to be honest, we could have expected as much. Consider that just last week, Nadella posted an open letter to employees, reiterating that cloud and productivity tools were the future.

All told, the company generated $4.61 billion in profit on $23.38 billion in revenue. To put that in perspective, revenue is up 18 percent over the year-ago period, and profit only fell by a modest 7 percent — that’s not bad considering Microsoft recently closed its massive $7 billion purchase of Nokia’s mobile division.

Image credit: Associated Press


Filed under: Software, Microsoft


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