Microsoft prefers to focus on cloud products over handsets

Microsoft Corp posted better-than-expected quarterly adjusted revenue for the ninth straight quarter, thanks to growing demand for its cloud products, sending its shares soaring in after-hours trading yesterday.

The company, under chief executive Satya Nadella, has been shifting its focus to software and cloud services with slowing demand for the Windows operating system in a weak PC market.

"The Nadella strategy is working and you are seeing the results in the quarter," Bernstein analyst Mark Moerdler said, Reuters reported.

Microsoft shares were up as much as 9.8 per cent to $52.75 in after-hours trading, as they peaked to the highest level since March 2000.

The software giant had also been cutting costs and streamlining its operations in an attempt to focus on more lucrative businesses.

The latest cost-cutting exercise would see 1,000 jobs go.

"The job reductions were spread across more than one business area and country and reflect adaptations to business needs," a spokeswoman said in an email.

According to commentators, between mobile and cloud - the two key technology markets of the future - Microsoft seemed to have a grip on at least one of them - cloud.

The quarterly results yesterday, sent out a stark message - phone hardware revenue had dropped 58 per cent year over year, which was blamed by the company on an "updated strategy."

The phrase served to conceal Microsoft's shift in focus away from operating Nokia's devices business like the Finnish handset maker used to, with a wide range of phones.

Rather, the company is in the process of building a leaner division that would roll out only a few different handsets Meanwhile, the company's "Intelligent Cloud" business reported revenue growth during the last quarter the only segment to grow revenue during the last quarter.