Cloud service boost powers Microsoft third-quarter earnings

Microsoft has posted net earnings of $5.66bn, down $500m on the same period last year.

Microsoft has posted net earnings of $5.66bn, down $500m on the same period last year.

But revenue from its cloud business has doubled.

For the quarter, which ended March 31 2014, Microsoft reported revenue of $20.49bn.

In the earnings call transcript posted on the SeekingAlpha financial site, CFO Amy Hood said: "Cloud revenue more than doubled again this quarter. Office 365 is now on an annual revenue run rate of $2.5bn and Azure revenue grew over 150%, driven by both new customers and increased usage."

She said Microsoft was experiencing strong growth in its enterprise business covering products such as SQL Server, System Center, Windows Server Premium and Lync.

Devices and consumer revenue grew 12% to $8.30bn, Microsoft said.

CEO Satya Nadella described the work Microsoft had done during the quarter as execution and transition. "We delivered solid financial results and we took several steps to reorient Microsoft," he said.

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Referring to the recent strategy announcements where Microsoft plans to take a device agnostic approach, Nadella said: "The mobile-first and cloud-first world. It’s a rich canvas for innovation and a great growth opportunity for Microsoft across all our customer segments."

Nadella said Microsoft's cloud business had doubled and there was strong in the company's Windows OS business. "We saw strong momentum in cloud services. Our commercial cloud business more than doubled year-over-year with Office 365 and Azure both performing extremely well. Business customers continue to make Windows their overwhelming platform of choice, with solid growth in both Windows Pro and Windows volume licensing revenues."

When asked about changing Windows pricing Nadella said: "Given BYOD and software security issues, we want to be able to reinforce that core value, but then when it comes to new opportunities from wearables to internet of things, we want to be able to participate on all of this with our Windows offering, with our tools around it.”

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