Microsoft on Thursday reported fiscal third-quarter results that beat analysts’ expectations on strong sales of tablets and consumer software and cloud services, but the numbers also showed continuing weakness in Windows sales as the PC market remained sluggish.
For the third fiscal quarter, ended March 30, Microsoft reported revenue of $21.7 billion, slightly ahead of estimates of $21.06 billion and up 6 percent from the same period a year ago. Earnings per share, excluding certain one-time costs, came in at 61 cents, compared to estimates of 51 cents by analysts surveyed by Thomson Financial.
“Customers continue to choose Microsoft to transform their business, and as a result we saw incredible growth across our cloud services this quarter,” said CEO Satya Nadella in a statement. “Next week at Build we’re excited to share more about how we’re empowering every individual and organization on the planet to achieve more with the next generation of our platforms.”
Microsoft provided an in-depth preview of Windows 10 earlier this year, when it showed the operating system’s ability to stretch across multiple device form factors, including smartphones, tablets and traditional PCs. The company is expected to provide a more in-depth look at its "Build" developers conference in San Francisco next week. Attendees might also get an advanced look at more futuristic products, like the HoloLens VR project.
In the face of competition from smartphones and tablets powered by Google’s Android OS and Apple iOS, Microsoft needs to give its Windows franchise a boost. “People only have so much money to spend, and for most their PCs still work well enough,” said Gartner Research Vice President Stephen Kleynhans. Sales of Windows on business PCs fell 2 percent in the quarter, Microsoft said, while sales of Windows Pro to consumer PC makers were down 19 percent. Non-pro sales were off 26 percent.
The quarter was not short of good news for Microsoft. Sales of Office 365 Home and Personal subscriptions were up 35 percent sequentially, while search advertising revenue increased 24 percent year-over-year. Xbox Live usage was up 30 percent.
Microsoft shares were up .71 percent in after-hours trading Thursday as investors mulled the report.