Microsoft enjoys a revenue boost thanks to strong cloud sales

Strong sales of cloud products to businesses helped lift Microsoft’s revenue by 18 percent last quarter, though its profits declined. Revenue for the quarter ended June 30 was $23.4 billion, up from $19.9 billion last year and ahead of the consensus analyst estimate of $23 billion, according to a poll by Thomson Reuters. The revenue figure includes $2 billion from the Nokia Devices and Services business that Microsoft acquired. That deal closed 25 days after the start of the quarter. Net income was $4.6 billion, or $0.55 per share, down from $4.9 billion, or $0.59 per share, a year earlier, and 5 cents below the Wall Street analysts’ consensus expectation. On a per-share basis, profit was down 7 percent year over year, including an $0.08 loss from the Nokia business.

Microsoft’s new chief executive has said the two most important trends for the company’s future are mobile and cloud computing. But it is doing much better in cloud computing than in mobile. In what amounted to its first financial report card since acquiring the mobile business of Nokia, the Finnish handset maker, Microsoft said its overall profits slid because the Nokia business continued to lose money. At the same time, though, Microsoft’s revenues got a big boost from the sales of mobile phones. Microsoft will continue to face a challenge in creating mobile products that excite people, even as it cuts costs to prevent Nokia from dragging the company’s overall profits down. In the earnings report released Tuesday, Nokia did just that, contributing to a decline in Microsoft’s net income and helping its revenue jump 18 percent with the addition of $2 billion in Nokia device sales. But there was better news for Microsoft’s cloud business. Annual sales from its commercial cloud business would be $4.4 billion if it sustained its June sales levels for a full year. The company doubled its cloud revenue for the fiscal year that ended June 30. Satya Nadella, Microsoft’s chief executive, said he was “proud that our aggressive move to the cloud was paying off.”