IBT Satya Nadella
Satya Nadella, CEO of Microsoft Corporation, says Microsoft's HoloLens will have amazing gaming abilities. Reuters

Microsoft on Monday reported quarterly results that beat analysts’ expectations on the strength of strong sales of tablets and consumer software, but the company’s results also showed continuing weakness in its efforts to become a player in the mobile market and a sharp drop in Windows revenue. The company did not immediately provided an updated forecast for its current fiscal year, which ends June 30.

For the second fiscal quarter, ended Dec. 31, Microsoft reported revenue of $26.5 billion, slightly ahead of estimates of $26.3 billion and up 8 percent from the same period a year ago. Earnings per share, excluding certain one-time costs, came in at 77 cents, beating estimates of analysts surveyed by Bloomberg by two cents.

“Microsoft is continuing to transform, executing against our strategic priorities and extending our cloud leadership,” said CEO Satya Nadella in a statement. “We are taking bold steps forward across our business, and specifically with Windows 10, to deliver new experiences, new categories and new opportunities to our customers.”

Microsoft provided an in-depth preview of Windows 10 last week, when it showed the operating system’s ability to stretch across multiple device form factors, including phones, tablets and traditional PCs.

In the face of competition from devices powered by Google’s Android OS and Apple iOS, Microsoft needs to give its aging Windows franchise a boost. Sales of Windows on business PCs fell 13 percent in the quarter, Microsoft said, while sales of Windows to consumer PC makers also fell 13 percent.

On the upside, sales of Office 365 Home and Personal subscriptions were up 30 percent sequentially, topping 9.2 million, while search advertising revenue increased 23 percent year over year. Microsoft said it sold 6.6 million Xbox consoles during the period, due to “strong holiday season performance.”

Microsoft shares dipped about 3 percent during after-hours trading Monday, on investor concerns about the company’s weaker than expected sales to businesses.