Microsoft's Q3 2017: cloud and Office power growth

LinkedIn, the professional social network acquired by Microsoft a year ago for some $26 billion, contributed revenue of $975 million. That's up 11 percent from past year, when this number was $6.1 billion.

Microsoft stock is down about 3 percent after hours, following the release of an earnings report showing that the tech titan met or beat Wall Street expectations.

The company said its "more personal computing" segment saw $8.84 billion in revenue, well below StreetAccount's consensus estimate of $9.22 billion. "From large multi-nationals to small and medium businesses to non-profits all over the world, organizations are using Microsoft's cloud platforms to power their digital transformation". Office commercial products and cloud services revenue increased 7%, while Office consumer products and cloud services revenue increased 15%. Analysts expected earnings of 70 cents per share on $23.62 billion in revenue, according to Thomson Reuters consensus estimates.

"Our results this quarter reflect the trust customers are placing in the Microsoft Cloud", said Microsoft CEO Satya Nadella in the earnings announcement.

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Intelligence Cloud revenue increased 11% to $6.8 billion. Its "office commercial products and cloud services business saw revenue rise 7%". Microsoft expects its cloud-computing business to hit a $20 billion run rate by 2018. Microsoft now has 26.2 million Office 365 consumer subscribers.

Revenue breakout: Product, $13.39B (down 6.5%); Service and other, $8.7B (up 40%). "With Microsoft Azure, we are building on the industry's leading cloud platform in terms of innovation, technology, security and regulatory compliance, which is very important as a Swiss financial institution". Microsoft isn't saying much about its mobile plans, but its phone revenue dipped $730 million this quarter.

Microsoft has just reported its earnings for Q3 2017 (fiscal year). Surface revenue dropped 26% to $831 million, its lowest figure in more than a year, in part because of more competition from other similar devices and ahead of expected new models expected out later this year. LinkedIn added $975 million in revenue.

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  • Regina Walsh