Microsoft Q3 Earnings Beat Expectations, Boosted By Cloud Services

Driven by the success of its cloud computing services, Microsoft on Thursday said profits during its fiscal third quarter jumped nearly 30%.

“Strong execution and demand for our cloud-based services drove our commercial cloud annualized revenue run rate to more than $15.2 billion,” Amy Hood, EVP and CFO at Microsoft, said in an earnings statement.

For the quarter ended March 31, net income increased from $3.76 billion to $4.8 billion year-over-year. Excluding traffic acquisition costs, search advertising revenue increased 8%.

Revenue from Microsoft's productivity and business processes increased by 22% to $8 billion, while revenue from the company's “Intelligent Cloud” business rose 11% to $6.8 billion.

Despite its strong quarter, Microsoft continues to struggle in various areas of its business. For example, revenue in more personal computing decreased by 7% to $8.8 billion.

In addition, Android recently bested Microsoft Windows as the world's most popular operating system, according to recent findings from Web analytics firm StatCounter.



“It marks the end of Microsoft's leadership worldwide of the OS market which it has held since the 1980s,” Aodhan Cullen, CEO of StatCounter, noted in a report.

Considering the shift, Cullen credited the growth of smartphones, faster wireless Web speeds, a decline in sales of traditional PCs, and the impact of Asia on the global market.

In March, Android topped the worldwide OS Internet usage market share with 37.93%, which put it marginally ahead of Windows (37.91%) for the first time.

To its credit, Windows still dominates the worldwide operating system desktop market -- PCs and laptops, this is -- with an 84% Web usage share in March.

Moving forward, “it will be difficult for Microsoft to make inroads in mobile, but the next paradigm shift might give it the opportunity to regain dominance,” Cullen suggested.

Among other long shots, Microsoft just recently unveiled Sprinkles -- a camera app, which uses artificial intelligence software to suggest smart captions.

Much like Snapchat, Sprinkles can also frame users’ faces, and then custom fit the images with fun graphics. The new app also features hundreds of emojis and stickers.

Also of note, LinkedIn recently surpassed 500 million registered users, the Microsoft-own social network announced earlier this week. The milestone comes several months after LinkedIn unveiled its first major redesign since its launch back in 2003.

Late last year, Microsoft officially completed its $26 billion acquisition of LinkedIn.

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