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Microsoft’s cloud strategy leads to another winning quarter on Wall Street

Microsoft’s cloud strategy leads to another winning quarter on Wall Street


Xbox Live hits new record of 55 million monthly active users

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Microsoft just released its fiscal second quarter earnings report, posting revenue of $24.1 billion and net income of $5.2 billion, beating Wall Street estimates in both cases. The company’s huge acquisition of LinkedIn closed fairly late in the quarter, but still got plenty of attention in the earnings release. Microsoft says LinkedIn brought in revenue of $228 million and a net loss of $100 million for the period “beginning on December 8th, 2016.” LinkedIn is reported under the Productivity and Business Processes segment of Microsoft’s Q2 earnings.

It was a big quarter for Microsoft’s cloud strategy as the company continues inching up on industry leader Amazon Web Services. Azure revenue increased by an impressive 93 percent “with Azure compute usage more than doubling year-over-year,” according to the earnings release.

The More Personal Computing business was down 5 percent, which Microsoft continues to attribute to still-falling phone revenues. Those were down 81 percent. Windows OEM revenue jumped by 5 percent after a flat Q1, and revenue for the Windows commercial products and cloud services division was also up 5 percent.

Gaming dropped by 3 percent year-over-year, which Microsoft explained was due to “lower Xbox console revenue offset by Xbox software and services revenue growth” — basically the same thing we heard last quarter. But Xbox Live subscriptions are a bright spot, now up to 55 million monthly active users — a new record — versus 47 million last quarter. Revenue for the Surface division was down 2 percent compared to this time last year. CEO Satya Nadella will be participating in the company’s investor call this afternoon to speak on Microsoft’s financial outlook and strong-performing cloud business.