Microsoft second quarter profit hits $11.6 billion

Figures fuelled by corporate desire for cloud-based computing systems

Microsoft’s recent wins include a massive contract with the Pentagon, for which it beat out front-runner Amazon, and a cloud deal with accounting giant KPMG. Photograph: Denis Charlet/AFP via Getty

Microsoft’s recent wins include a massive contract with the Pentagon, for which it beat out front-runner Amazon, and a cloud deal with accounting giant KPMG. Photograph: Denis Charlet/AFP via Getty

 

Microsoft ’s quarterly sales and profit topped analysts’ projections, fuelled by persistent demand from corporate customers seeking to shift computing tasks to cloud-based systems.

Fiscal second-quarter profit was $11.6 billion (€10.5 billion), or $1.51 (€1.37) a share, Microsoft said on Wednesday in a statement.

That compared with the $1.32 (€1.20) per-share average estimate of analysts polled by Bloomberg.

Revenue in the period ended December 31st rose 14 per cent to $36.9 billion (€33.5 billion), above the $35.7 billion (€32.4 billion) average prediction.

Chief executive officer Satya Nadella has been trying to narrow the gap in cloud infrastructure with market leader amazon.com, in both technical capabilities and the calibre of customer it can attract for its Azure products and services.

Microsoft’s recent wins include a massive contract with the Pentagon, for which it beat out front-runner Amazon, and a cloud deal with accounting giant KPMG.

Microsoft is also pulling in more revenue from Office 365, with companies such as KPMG and Ikea upgrading to the internet-based productivity software.

Azure revenue in the recent period rose 62 per cent and Office 365 sales to businesses increased 27 per cent.

“The cloud business is on fire,” said Hari Srinivasan, senior research analyst and technology portfolio manager at Neuberger Berman Group, which manages more than $340 billion (€308 billion) including Microsoft shares.

“More importantly, it’s also growing in profitability. As the business scales, the profitability increases. That’s what we are banking on.”

Shares of the Redmond, Washington-based company jumped as high as $172.25 (€156.50) after the report.

They closed at $168.04 (€152.68), an all-time high. The stock gained 13 per cent in the December quarter, outpacing the 8.5 per cent increase in the Standard and Poor’s 500 Index. – Reuters