Microsoft Corp on Monday reported that its quarterly profit dipped even as revenue increased with help from sales of Surface tablets, Xbox One consoles and cloud services.
Profit fell 10 percent from a year ago to US$5.9 billion, while revenue hit US$26.5 billion in the quarter ended on Dec. 31 last year, and chief executive Satya Nadella said the company’s transformation is on target.
“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,” Nadella said.
Microsoft shares were down slightly more than 3 percent to US$45.53 in after-market trading that followed the release of the earnings figures.
In the recently ended quarter, revenue from business cloud services including Office 365 and Azure more than doubled to hit an annualized rate of US$5.5 billion.
Meanwhile, subscriptions to home versions of Office 365 and Personal climbed more than 30 percent to 9.2 million as Microsoft continued to adapt to lifestyles in which software is rented online as a service instead of bought and installed on people’s machines.
“We again saw enthusiasm and demand around our cloud offerings like Office 365, Dynamics CRM Online and Azure, as well as Surface Pro 3,” Microsoft chief operating officer Kevin Turner said.
“Our sales engagement worldwide continues to focus on helping customers and partners transition to the cloud,” he said.
Microsoft’s Bing saw its share of the US online search advertising market grow to just shy of 20 percent, and sales of Xbox video game consoles climbed to a total of 6.6 million units due to strong performance during the year-end holiday season, according to Microsoft.
Revenue from sales of Surface tablets and accessories rose 24 percent to US$1.1 billion in the quarter.
The gains helped offset a 13 percent drop in revenue from licensing of the Windows operating system, which has long been a mainstay at Microsoft.
Microsoft pulled back the curtain last week on the upcoming Windows 10 operating system focused on seamlessly connected devices such as computers, tablets and smartphones.
Microsoft hopes Windows 10 will renew its relevance in an age of mobile computing dominated by Apple Inc and Google Inc backed Android software.
In order to boost its take-up by the approximately 1.5 billion people around the world who use Windows-powered computers, in a change of policy Microsoft will allow free upgrades of Windows.
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