Microsoft sees growth amid computing demands from pandemic COVID-19

Microsoft Office PHOTO: Getty Images

Microsoft reported rising revenue in the last quarter on Wednesday amid strong demand for cloud computing services from businesses and consumers affected by a pandemic and huge profits from its Xbox gaming operations.

Profits in the quarter ending June 30 fell 15 percent to $ 11.2 billion, as a result of higher taxes compared to the previous year.

Meanwhile, revenue rose 13 percent to $ 38 billion, led by strong gains in its cloud computing and Xbox gaming services.

Executive Director Satya Nadella said Microsoft was equipped to deal with the coronavirus pandemic with its “modern, integrated technology stack.”

“We are seeing companies accelerate the digitization of every part of their operations, from manufacturing to sales to customer service,” Nadella said in a conference call.

Microsoft shares fell 2.5 percent in after-hours trading in the results, which were largely ahead of expectations.

Its shares have been trading at near-record levels amid a rise of around 50 percent since March, giving it a market value of more than $ 1.6 trillion.

Revenue from Microsoft’s “smart cloud” division, which includes its Azure business, increased 17 percent to $ 13.4 billion in the fiscal fourth quarter.

In the personal computing segment, including the Windows operating system, revenue increased 14 percent to $ 12.9 billion.

Within that segment, revenue from the Xbox gaming service increased 65 percent and sales of its Surface devices increased 28 percent.

Xbox hardware revenue increased 49 percent as Microsoft increased the number of consoles sold even with a newer version expected this year.

“This was an innovative quarter for games,” said Nadella.

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“We saw record participation and monetization … as people around the world turned to games to connect, socialize, and play.”

Microsoft experienced a more modest six percent increase in its business and productivity operations, which include the Office software package and LinkedIn.

Daniel Ives of Wedbush Securities called Microsoft’s results “solid,” led by its cloud computing that benefits from the work-from-home trend.

“This current remote work from the home environment is further catalyzing companies to make strategic change in the cloud with Microsoft the primary beneficiary, as evidenced by the strong results tonight,” said Ives.

Earlier on Wednesday, the workplace messaging platform Slack filed an EU antitrust complaint against Microsoft, alleging that the integration of the “Teams” service into the demand for Office software represented unfair competition.

Microsoft said Teams was growing because it offers video, something Slack doesn’t offer.




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