Thu, Jul 21, 2016 - Page 10 News List

Microsoft’s earnings surprise; stock surges

AFP, SAN FRANCISCO and FRANKFURT, Germany

Microsoft Corp on Tuesday said it posted a profit of US$3.1 billion in the just-ended quarter, swinging into the black a year after hefty charges from writing off mobile phone assets.

The profit in the tech giant’s fourth fiscal quarter was nearly identical to the loss from a year earlier, when it took charges of more than US$7 billion to reflect the lower value of the Nokia Oyj mobile phone division it had acquired.

Revenue dipped to US$20.6 billion from US$22.2 billion in the same period last year.

Overall, the results were better than most analysts’ forecasts and sparked an after-hours gain of more than 3 percent for the company, which is seeking to shift its emphasis to cope with declining sales of PCs.

Microsoft chief executive officer Satya Nadella is trying to reduce the firm’s dependence on software sales and boost its role in services and cloud computing, with some contributions from its Xbox gaming platform and Surface tablets.

Nadella said in a statement that “the Microsoft Cloud is seeing significant customer momentum and we’re well positioned to reach new opportunities in the year ahead.”

Last month, Microsoft announced a US$26 billion acquisition of LinkedIn Corp, the biggest-ever deal for a social media company, which is expected to help the tech giant increase its cloud offerings for business.

Microsoft closed out its fiscal year with a 38 percent rise in profit to US$16.8 billion.

In related news, German software giant SAP SE yesterday confirmed its full-year targets after strong growth in its cloud business propelled earnings and sales in the second quarter.

SAP said in a statement that its net profit soared by 73 percent to 813 million euros (US$893.24 million) in the April-to-June quarter.

The rise was partly attributable to the fact that the year-earlier figure had included restructuring costs.

However, the increase also reflected a strong operating performance with strong demand for its cloud products pushing up overall revenues by 5.4 percent to 5.237 billion euros.

SAP said that revenues in its cloud business increased by 30 percent to 720 million euros.

SAP chief executive officer Bill McDermott said the firm was not expecting any impact on its business from Britain’s decision to leave the EU, adding that he “confidently” confirmed the group’s full-year targets.

SAP is penciling in cloud revenues of 2.95 billion euros to 3.05 billion euros for the full year and group operating profit of 6.4 billion euros to 6.7 billion euros.

Last year, SAP booked annual cloud revenues of 2.3 billion euros and total group operating profit of 6.35 billion euros.

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