Microsoft Q4 gets boost from cloud computing


Microsoft’s cloud computing business helped boost its fourth-quarter revenue and earnings above Wall Street’s expectations, further validating a strategy pushed by CEO Satya Nadella since he took over in 2014.

Nadella described the better-than-expected performance in a conference call Thursday as part of the “continuing transformation” of the Redmond, Washington-based company.

Microsoft reported that is cloud business revenue, which includes its signature Azure platform, grew 11 per cent year-over-year to $7.4 billion (all figures US$). Revenue from the Azure cloud platform nearly doubled, the company said.

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The company reported fiscal fourth-quarter net income of $6.51 billion, or 83 cents per share. Earnings, adjusted for non-recurring costs and asset impairment costs, came to 98 cents per share.

The results handily beat Wall Street expectations. The average estimate of 14 analysts surveyed by Zacks Investment Research was for adjusted earnings of 71 cents per share.

The software maker posted revenue of $23.32 billion in the period. Its adjusted revenue was $24.7 billion, which also topped Street forecasts. Eight analysts surveyed by Zacks expected $24.19 billion.

Microsoft shares have risen 19 per cent since the beginning of the year, while the Standard & Poor’s 500 index has risen 10 per cent. They slipped 57 cents to $73.70 in extended trading following the release of the earnings report.

The company earlier this month announced it was cutting thousands of sales jobs.

On Thursday it recorded $306 million in fourth-quarter employee-severance expenses related to a sales and marketing restructuring plan. Asked about the restructuring, Nadella characterized it as part of a shift in skill sets to adapt to changing demand.

“This transformation is ongoing,” Nadella said. “It’s been happening over multiple years, but now we’ve got very good customer momentum.”

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