Microsoft Beats the Street with Office and Azure Driving Profit

Microsoft Corp. posted quarterly profit that beat Wall Street expectations as the software and technology company signed up large numbers of businesses to its cloud computing service Azure and to Office 365 productivity suite.

Much of the recent growth at Microsoft has been driven by the cloud computing business due to more companies seeking to cut costs for data storage through adopting software that is cloud-based and moving their apps to a data center.

Azure, the flagship cloud product of the company competes with Amazon Web Services the dominant cloud service, but posted 93% growth during its fiscal third quarter that ended on March 31.

One Wall Street analyst said that Microsoft, thanks to the success of Azure, is gaining more steam in the huge shift to the cloud, and the results are self-explanatory.

The growth at Azure propelled Microsoft into the No. 2 spot in the cloud computing market that is estimated to be $15.6 billion. It now holds a share of 14%, behind the 32% of AWS, showed research supplied by Canalys.

Shares of Microsoft, which have increased by 40% the last 12 months, closed 2.1% higher in Thursday trading.

Revenue at the productivity and business processes division, which includes its Office 365, was 17% higher ending the quarter at $9 billion and topped Wall Street estimates of $8.73 billion.

Microsoft’s division of More Personal Computing saw its revenue increase by 13% to end the quarter at $9.9 billion, including an increase of 32% for Surface business.

Senior finance manager of Microsoft Investor relations Kristin Chester announced that growth had been better that was expected and came from the evolving portfolio of products the business offers.

Microsoft refocused efforts and catered to the productivity audience with its Surface that is both tablet and PC, said an analyst on Wall Street and Apple is playing catch when it comes to that.

In all, revenue at the software maker increased by 16% to end the quarter at $26.82 billion far ahead of Wall Street estimates of $25.77 billion.

Net income was up to just over $7.42 billion, equal to a per share mark of 95 cents compared to last year at the same time of $5.48 billion equal to 70 cents a share. Analysts were expecting earnings to be 85 cents a share.

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