Microsoft (NASDAQ: MSFT) investors are floating on Cloud 9.
The Seattle-based software company’s efforts to get automakers, retailers and governments onto its cloud computing platform drove its third-quarter earnings above Wall Street estimates.
Microsoft posted fiscal third-quarter earnings of $8.8 billion U.S., up 19% from the same period last year. The company founded by Bill Gates said it had a profit of $1.14 per share, beating the $1 per share that was anticipated by analysts. Microsoft also topped forecasts with $30.6 billion in revenue, a year-over-year increase of 14%. Analysts surveyed by Zacks had expected $29.8 billion of revenue.
As its Windows software business steadily declines, much of Microsoft's growth now comes from selling its cloud services to businesses and governments. Microsoft Chief Financial Officer Amy Hood said in a written statement issued on Wednesday that revenue from the company's "commercial cloud" segment grew 41% year-over-year to $9.6 billion.
Microsoft is battling Amazon for a multi-billion dollar contract to supply the U.S. military with cloud computing services. The Pentagon is expected to award the contract this summer. Microsoft has already won a smaller $480 million contract to build HoloLens augmented reality headsets for American soldiers.
In the gaming sector, Microsoft said that revenue from its Xbox division grew 5%, with 12% growth in software and services offsetting a decline in hardware sales. The company is preparing to launch its first diskless console next month as it braces for increasing competition from new forms of gaming, such as a Google's console-free subscription game streaming service expected out later this year.
Microsoft shares have risen 23% since the beginning of the year, while the Standard & Poor's 500 index has risen 17%. In the final minutes of trading on Wednesday, Microsoft shares hit $125.07, an increase of 34% in the last 12 months.
Those shares began Thursday up $4.49, or 3.6%, to $129.50
Tech Insider
