General Business: Microsoft shares slip on Azure slowdown

General Business: Microsoft shares slip on Azure slowdown

Microsoft published the company's financial results for the fiscal quarter that ended on December 31, 2018, reporting revenue of $32.5 billion with a 12% YoY increase, operating income of $10.3 billion, and a net income of $8.4 billion.

Microsoft's stock fell almost 4% in after-hours trading on the earnings report, despite the fact that its numbers fell short of forecasts by a small amount.

Office commercial product and cloud services revenue were up 11 percent, driven by revenue growth of 34 percent in for the Office 365 Commercial product. Of course, a 76 percent increase in business is certainly nothing to sniff at, but some see it as evidence that Azure's period of wild, exponential growth is over.

Microsoft reported a strong second quarter for FY19, but one of the areas were the company posted lower-than-anticipated revenue is the Windows division. The Intelligent Cloud business saw revenue growth of 24 percent overall, with Azure revenue growth hitting 76 percent. On the flip side, Office 365 consumer base has risen to 33.3 million users which is an increase from its 32.5 million last quarter. Here's the operating income breakdown.

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The lone outlier was revenues from computer manufacturers bundling Windows, which fell five per cent: non-Pro OEM sales fell 11 per cent, and Pro OEM sales fell two per cent. Microsoft noted the ongoing Intel processor shortage, particular for workstations and PCs, had hurt it this quarter, and could hamstring Windows in the coming months and into next quarter. Although third-party revenue is down, the Surface range continues to grow with a 39 per cent increase in revenue from their flagship hardware. Windows simply isn't the universal computer language it once was and the situation is likely to get worse.

Office consumer products and cloud services revenue was up 1 percent. "We are delivering differentiated value across the cloud and edge as we work to earn customer trust every day". Microsoft is going toe-to-toe with Amazon in the cloud arena - its one of the few companies out there that can really give AWS (Amazon Web Services) some competition.

"At this point we are seeing these very large digital transformation efforts and projects that we are partnered with spanning across all industries", Nadella told analysts on a conference call.

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