Microsoft shares boosted by growth in cloud services

Only 4.5 million Lumia phones sold in the Holiday quarter.

In all, Microsoft said its second-quarter net income declined to $5 billion, or 62 cents a share, down from $5.86 billion, or 71 cents a share, a year earlier.

Microsoft, under Chief Executive Satya Nadella, has been focusing on cloud services and mobile applications as growth slows in its traditional software business.

"Businesses are also piloting Windows 10, which will drive deployments beyond 200m active devices". The company's intelligent cloud group, which includes its Azure service, rose five per cent to $6.3 billion. However, sales in the December quarter were slashed by $1.9 billion, due to deferrals related to the "Halo 5" game and the new Windows 10 operating system.

Revenue was down to $23.8bn and profit fell to $5bn, mainly as a result of the strong dollar and shrinking PC market that has affected the fourth-quarter results of most United States tech firms. The company made a decision to lay off thousands of people from its phone division past year and refocus on building a relatively small number of Windows Phone handsets rather than keep making the broad range of phones that Nokia had prior to its acquisition in 2014. Sales for server products and cloud services revenue grew 10% in constant currency, while Azure revenue grew 140% in constant currency with revenue from Azure premium services growing almost 3x year-over-year.

Windows Phone 8 devices have not sold well and even less consumers wanted one in the wake of the Windows 10 release.

Now the second largest cloud provider, Microsoft stands far ahead of rivals Salesforce, Oracle and Google, according to analysts at Goldman Sachs. The results sent its shares up 3% in after-hours trading. Microsoft's stock rose in value by 7% following its earnings announcement. Last quarter, Microsoft announced an $8.2 billion annual run rate for its commercial cloud business, which it updated to $9.4 billion this quarter.

Microsoft continued to see growth with is Surface products, as the segment is up 29% year-over-year.

Xbox Live monthly active users grew 30pc year-over-year to a record 48m users.

Revenue for Productivity and Business Processes sits at $6.7 billion (down 2 percent), and Office 365 now enjoys 20.6 million subscribers. The revenue of the Windows Phone business plunged 49% year-over-year.

Source: Microsoft shares boosted by growth in cloud services