Cloud sales double for Microsoft

Revenue up, profit is down, but the big news coming out of Redmond is that commercial cloud sales have doubled for the fourth consecutive quarter

Microsoft managed to double commercial cloud sales for the fourth consecutive quarter.

Third quarter revenue for fiscal 2015 came in at $21.7bn, up from $20.4 year over year and beating analyst expectations of $21.06bn.

The marginal improvement was thanks to yet another strong quarter of cloud growth and the acquisition of Nokia in 2014, the impact of which is now starting to trickle through into results.

Beating Wall Street will no doubt give chief executive Satya Nadella the breathing space he needs to continue the ongoing transformation of business; but the earnings report wasn’t all peaches and cream.

Quarterly profits dropped by 11.9% to $4.9bn or 61 cents per share. There were sharp falls in Devices and Consumer Licensing and Computing and Gaming Hardware and this, combined with an increase in R&D spending and dealing with the aftermath of the massive job cull, led to the fall in net income.

But the growth in commercial cloud was more than enough to offset any concerns that shareholders might have. Nadella has made clear that his number one priority is turning Microsoft into a cloud-first company in order to compete with the likes of Amazon, Google and IBM.

“Customers continue to choose Microsoft to transform their business and as a result we saw incredible growth across our cloud services this quarter,” Nadella said in a statement.

Shares jumped by 3% in after hours trading.

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