Microsoft second-quarter sales beat analysts’ forecast

Microsoft Corp's fiscal second-quarter sales and profit came in much better than estimates by analysts as it benefited from growth in cloud services as also a resurgent Xbox One game console, Bloomberg reported.

Profit excluding certain costs in the period ended 31 December stood at 77 cents a share.

Revenue was up 8 per cent to $26.5 billion, the company said yesterday in a statement.

On an average analysts projected profit at 75 cents on sales of $26.3 billion, data compiled by Bloomberg showed.

Revenue for the quarter came in at $26.47 billion, up 8 per cent against the same quarter a year ago. Gross margin too improved, climbing by 1 per cent to $16.33 billion.

Operating income, however, was down 2 per cent to $7.78 billion, and earnings per share fell 9 per cent to $0.71. The decline was partly due to $243 million in expenses incurred by Microsoft's reorganisation and by the integration of Nokia's Devices and Services division.

Earnings per share also suffered due to an income tax bill as a result of an IRS audit.

Device and Consumer Licensing saw steep declines with revenue declining 25 per cent to $4.17 billion, and gross margin down 22 per cent to $3.88 billion.

Windows OEM revenue declined 13 per cent as it fell to $455 million.

With Satya Nadella approaching his first anniversary as chief executive officer, Microsoft would be boosting its Azure cloud software sales and web-based versions of its work-productivity programmes, Office 365.

Weakening demand for Xbox One which emerged as the top selling video-game console in the US for the holiday season was helped by price cuts and new games.

According to Daniel Ives, an analyst at FBR Capital Markets & Co, if one compared it to the rest of large-cap enterprise tech, it continued to be a little bit of a shining star.

Meanwhile, arstechnica.com reported that overall revenue increased, and sales of the Surface Pro 3 computer held strong according to the company. The Windows market, however declined with operating income declining, as the Nokia integration and reorganisation continued to cost money.