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Microsoft sales soar 25% on huge demand for Office, Surface, Xbox and cloud
Who needs Windows?
Microsoft (MSFT, Tech30) sales soared 25% in the last three months on the back of cloud, Xbox and, yes, even the Surface tablet and Nokia smartphones.
This is a new Microsoft that doesn’t need to rely on its operating system to support it. Windows sales were just OK in the last quarter: Sales to businesses were up 10% and consumer upgrades were up just a bit, but consumer PC sales were down 1%.
The real story was in the cloud, which is now the primary focus of the company, according to new CEO Satya Nadella. Sales of cloud services to businesses grew by a whopping 128% last quarter, driven primarily by the company’s Office and Azure platforms. Eighty percent of the Fortune 500 are using Microsoft’s cloud, Nadella said on a conference call with investors Thursday.
Office, which recently began offering a subscription model for consumers, now has 7 million Office 365 subscribers, Microsoft said. That’s up 25% over the previous quarter.
But it wasn’t just software driving Microsoft’s sales growth. Devices were also a large factor, including more than $900 million worth of Surfaces — Microsoft’s once left-for-dead tablet line. Surface Pro 3 is selling at twice the rate that the Pro 2 was — and the tablet was profitable for Microsoft last quarter. That’s a big deal, considering Microsoft wrote down nearly $1 billion on excess Surface inventory a couple years ago.
Xbox sales doubled, though the comparison is a little weird — the Xbox One hadn’t launched yet a year ago. But Microsoft now has approximately 20 million paying members on its Xbox Live gaming and media network — another cloud success story.
The biggest boost came from Nokia sales, which Microsoft purchased in late April. Microsoft sold $2.6 billion worth of Nokia phones. Sales of its high-end Lumia smartphones were up year-over-year.
But even without Nokia, overall Microsoft sales would have grown by 11%.
Without the charge, Microsoft would have earned 54 cents per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, forecast earnings of 49 cents per share.
Microsoft’s $23.2 billion in revenue easily topped analysts’ forecasts of $22 billion.
Shares of Microsoft rose 3% after hours
source:http://money.cnn.com/2014/10/23/technology/enterprise/microsoft-earnings/index.html
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