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Microsoft signals CPU shortages are easing

Firm's CFO indicates the worst is over as it updates the markets on its fiscal third quarter performance

 Microsoft has indicated that it has seen some movement by customers reacting to the end of support for SQL Server 2008 and Windows 7 and is expecting more in the next few months.

The vendor has issued its Q3 numbers for the three months ended 31 March and indicated that the wind down of support was already generating sales.

"I do think we saw some benefit of end of support," Amy Hood, executive vice president & CFO, told analysts. "End of support obviously we've got SQL in July and then Windows in January. And so I do think we saw some impact, particularly in SQL and I do expect to see some of that in Q4."

Satya Nadella, CEO of Microsoft, said that Windows 10 was already installed on 800m devices and, "continues to gain traction in the enterprise as the most secure and productive operating system".

While having a trigger to encourage customers to invest in fresh hardware in the form of end of support deadlines is useful a lot of those vendors relying on income coming from the PC market have been watching the impact of Intel CPU shortages with interest, but Microsoft indicated it felt those issues were coming to an end.

Hood said that in its third quarter it had met some of the unfulfilled demand from the previous six months but it no longer saw it as, "a pent up situation heading into Q4".

"We feel good about the supply in the Commercial segment and the Premium Consumer segment, which is where the vast majority of our revenue is in OEM. And so I think in those segments, we feel fine for Q4," she said.

In terms of its own hardware the firm reported that in Q3 it had expanded the Surface portfolio with the Hub 2S and revenue improved by 21%, helped by particularly strong sales in Japan.

Overall the headline numbers were that revenue in the quarter climbed by 14% and hit $30.6bn and net income improved by 19% year-on-year to come in at $8.8bn.

Microsoft enjoyed growth in its cloud offerings with commercial revenues coming in at $9.6bn, a 41% increase on 2018 and Office 365 turnover was up by 30%.

"Overall, we feel very good about the progress we’ve made thus far in FY19. Our decision to invest with significant ambition in high growth areas coupled with strong execution has resulted in material revenue growth at scale and a stronger position in many key markets," said Hood.

"As FY20 approaches, we again see tremendous opportunity to drive sustained long-term growth. We will invest aggressively in strategic areas like Cloud through AI and GitHub, Business Applications through Power Platform and LinkedIn, Microsoft 365 through Teams, Security, and Surface as well as Gaming," she added.

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