Published: Sat, July 21, 2018
Business | By Eloise Houston

Microsoft’s solid Q4 bolstered by strong Xbox, Surface numbers

Microsoft’s solid Q4 bolstered by strong Xbox, Surface numbers

On a conference call with investors, Nadella attributed the strong results in part to a recent reorganization of the company's engineering teams to prioritize cloud computing and artificial intelligence over its legacy software products and Windows operating system.

Several key businesses in Microsoft's portfolio saw sales gains during the quarter, including its expanding commercial cloud business, which jumped 53 percent to $6.9 billion.

All in all, a familiar tale: cloud services are growing (although Microsoft remains reluctant to offer concrete numbers on Azure), and Microsoft seems to be successfully converting customers away from perpetual licenses and over to Office 365.

Moves into business services and cloud computing have reduced Microsoft's dependence on Windows, the dominant software for personal computers that has been overtaken in the consumer market by mobile devices powered by Google or Apple software.

Earnings per share (EPS) of $0.913.

BMO Capital's Keith Bachman, who has an Outperform rating on the shares, and a $109 price target, expects the company to beat on the top line, with perhaps $29.36 billion.

The company again noted an increase in Azure revenue - this quarter by 89 percent.

Azure has a 16 percent share of the global cloud infrastructure market, making it the second-biggest provider of cloud services after Amazon.com Inc's (AMZN.O) Amazon Web Services, according to April estimates by research firm Canalys. Revenues for the fiscal year, which also ended June 30, were $110.4 billion.

"Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation", the chief executive officer, Satya Nadella, said in a statement.

Around $10 billion was brought in by its gaming division, which includes revenues from its Xbox gaming console.

Switching gears to the More Personal Computing category, revenue increased by 17 percent, moving up to $10.8 billion.

Surface revenue jumped 25 per cent to $1.1 billion, "driven by strong performance of the latest editions of Surface" says Microsoft, while gaming revenues increased by 39 per cent.

Microsoft shares were up 3.45 per cent in after-hours trading at $108.

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