Microsoft Beats Earnings On Strong Cloud And Surface Sales But Phones Crater

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Since Satya Nadella stepped into the role of Microsoft CEO, the company's outlook has been a lot more positive than it had been in recent years. As the company's latest financials highlight, the company's killing it where cloud services are concerned, and as we've reported a few times over the past year, its latest OS, Windows 10, has proven to be a grand success.

When Microsoft unveiled its first cloud initiatives, many revolving around its Azure platform, it was hard to grasp just how important they'd become for the company. As we now see, and Nadella backs up, it's proving to be an extremely important market for the company. Nadella even uttered this bold statement, "The enterprise cloud opportunity is massive, larger than any market we have ever participated in."

Microsoft is also reaping great rewards with its Surface line, so with that, along with cloud and some other products, the company's stock has managed to rise more than 26% over the past year to sit at $55.00 at closing today. That growth is even more impressive when you consider the fact that the broader market has decreased in the same time, -5%.

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It's great to see Microsoft in a position of growth, but not all of the categories in the latest financial report are wrapped in positivity. As if Microsoft's phone presence could endure yet another drop, it has -- a staggering 49% over the past year. That's leading some to believe that Microsoft should just pull the plug, but we think Microsoft is too stubborn for that. After all, the smartphone market is enormous, so even if Microsoft isn't excelling in any great way right now, there's always the potential of the company finally - at some point - pulling a success story out of its hat.

If things go well, perhaps that could happen this year. You might recall that at the very end of 2015, we reported on how Microsoft is planning to revitalize its phone line by effectively expanding the Surface family to include smartphones. There are numerous things that many different people like or dislike about Windows Phone, so Microsoft is truly in an uphill battle to craft something that could possibly eat away at the complete domination in the smartphone market by Apple and Google.

It's up in the air whether or not Microsoft can actually turn its Windows Phone line into a major success, but history doesn't shine a bright light on things. Do you think Microsoft can turn its smartphone business around?