Microsoft Earnings Buoyed By Cloud Services, Marred By Windows Phone And Surface Declines

Microsoft saw a 12 percent year-over-year decline in revenue during the quarter ended September 30, 2015. On a GAAP basis, revenue for the quarter came in at $20.4 billion, along with operating income of $5.79 billion and net income of $4.62 billion, the latter of which is a 2 percent bump compared to the same quarter a year ago.

Leveraging the cloud continues to pay off for Microsoft. Revenue related to the Redmond outfit's Intelligent Cloud division grew 8 percent to $5.9 billion for the quarter, while operating income jumped 14 percent to $2.4 billion. Microsoft also noted that its Azure revenue and compute usage more than doubled compared to last year.


"We are making strong progress across each of our three ambitions by delivering innovation people love," said Satya Nadella, chief executive officer at Microsoft. "Customer excitement for new devices, Windows 10, Office 365 and Azure is increasing as we bring together the best Microsoft experiences to empower people to achieve more."

The success Microsoft experienced in cloud revenue helped offset declines in other areas, including phone revenue, which was knocked back 54 percent as Microsoft transitions to the Windows 10 for Mobile era.

Microsoft also saw a decline in Surface hardware sales. Surface generated $672 million during the quarter, down from $908 million in the same quarter a year ago. It will be interesting to see if it goes back up next quarter with the release of the Surface Pro 4 and Surface Book.