{"id":13836,"date":"2016-10-21T10:58:59","date_gmt":"2016-10-21T10:58:59","guid":{"rendered":"http:\/\/www.biphoo.com\/bipnews\/?p=13836"},"modified":"2016-10-21T10:58:59","modified_gmt":"2016-10-21T10:58:59","slug":"microsofts-cloud-sales-buffer-windows-pain","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/technology\/microsofts-cloud-sales-buffer-windows-pain.html","title":{"rendered":"Microsoft’s cloud sales buffer Windows pain"},"content":{"rendered":"

Microsoft’s cloud sales buffer Windows pain<\/span><\/strong><\/h2>\n

Microsoft’s cloud sales buffer Windows pain:-\u00a0<\/strong>Microsoft’s full embrace of cloud computing boosted revenue in the September quarter, but the world’s pivot away from personal computers remained a drag on the company’s performance.<\/span><\/p>\n

Microsoft reported first-quarter 2017 adjusted earnings of 76 cents a share on adjusted revenue of $22.3 billion Thursday. That easily topped the 68 cents and $21.7 billion analysts predicted, according to S&P Global Intelligence.<\/span><\/p>\n

Microsoft shares (MSFT) surged 6% in <\/span>after hours trading to an all-time high of $60.74, set to top a sub-$60 mark notched in December 1999.<\/span><\/p>\n

The challenges facing Microsoft’s turnaround from its glory days as a software seller remain apparent. First-quarter reported revenue was nearly flat at $20.45 billion compared to $20.38 billion in the <\/span>year ago quarter, while net income fell 4% to $4.8 billion.<\/span><\/p>\n

Personal computing revenues declined 2% to $9.3 billion, which included a 72% drop for Microsoft’s ill-fated phones business and a 5% drop in gaming. Windows OEM and commercial products revenue both remained flat.<\/span><\/p>\n

Helping boost the quarter <\/span>were gains in productivity and business processes, up 6% to $6.7 billion, and intelligent cloud, up 8% to $6.4 billion.<\/span><\/p>\n

That cloud jump includes <\/span>a 116% improvement for Microsoft Azure, which has roughly 10% of the global cloud market compared to industry leader Amazon Web Services at 30%. Microsoft CEO Satya Nadella has predicted that the company would hit $20 billion in annual cloud revenue by 2020.<\/span><\/p>\n

“The biggest takeaway from this quarter’s results will be the re-acceleration of Microsoft’s cloud business, which now is on pace for more than $13 billion annualized revenue,” says Josh Olson of Edward Jones Research. “Microsoft now is approaching <\/span>equal-footing with AWS cloud platform in terms of aggregate cloud revenue, and is steadily transforming its business to the next era of computing.”<\/span><\/p>\n

On a call with analysts, Nadella said that customers such as Adobe and Lowe’s are choosing Microsoft’s cloud because of its “hybrid design core, our higher level services, and our design point around Azure and Dynamics and Office365.”<\/span><\/p>\n

He added that the company’s “big commitment to a global build-out” also appealed to customers; Microsoft is operating 38 data centers worldwide, with more plans for expansion.<\/span><\/p>\n

But Frank Gillett, senior analyst with Forrester, says that while Microsoft’s cloud growth is “impressive … cloud revenue is not growing fast enough to make up for the slowdowns in Windows, Phone, and Xbox.”<\/span><\/p>\n

Plummeting Lumia phone sales was a big but expected “blemish” on the quarter, says Patrick Moorhead of Moor Insights and Strategy. He hopes to see growth in Windows products help make up for the smartphone misstep.<\/span><\/p>\n

“At some point that Windows number needs to start to rise,” he says, adding that despite PC declines “I am seeing positive signs in the commercial PC market for 2017. Enterprises are realizing they need to buy new hardware to take full advantage of the security features in Windows 10.\u201d<\/span><\/p>\n

Microsoft is still waiting <\/span>on approval of its $26-billion bid for professional networking site LinkedIn, which is expected to further spur the Redmond, Wash-based company’s efforts to pivot toward a more enterprise-focused business model that is anchored to cloud computing.<\/span><\/p>\n

That effort includes a $400 million deal with the National Football League, which has <\/span>distributing the company’s Surface tablet PCs to all of the league’s teams. Recently, Buffalo Bills coach Bill <\/span>Belichik said he was “done with tablets,” complaining that the product was unreliable. “I’m going to stick with pictures,” he said.<\/span><\/p>\n

Under Nadella, who is closing in on his third year at the helm of Microsoft, the company also has dedicated resources and personnel to next-generation tech trends that include machine learning and augmented reality.<\/span><\/p>\n

Microsoft’s artificial intelligence division recently announced that it had achieved a human-level error rate for dictation comprehension by a computer, while it continues to explore commercial initiatives for the HoloLens augmented reality headset.<\/span><\/p>\n

Asked on the call when AI research would translate into revenue, Nadella said that while the company would not shy away from investing in long-term research the yields are already migrating to products.<\/span><\/p>\n

“I’m not waiting for some future date to see ROI (return on investment) on AI,” he said. “(Microsoft) Office tools use AI today, PowerPoint designer uses it. That’s progress.”<\/span><\/p>\n

Source:-\u00a0http:\/\/www.usatoday.com\/story\/tech\/news\/2016\/10\/20\/microsoft-reports-first-quarter-earnings\/92470978\/<\/span><\/p>\n

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