Microsoft cites key cloud and mobile segments for good Q2

Microsoft is claiming strong cloud-and-mobile growth in its second-quarter earnings release. The company which is playing catchup in cloud now claims a $5.5 billion run rate there, up from the $4.4 billion it claimed last quarter.

On Monday the company reported diluted earnings per share (EPS) of $0.71 on revenue of $26.5 billion for period ending December 31, 2014, meeting consensus estimates of $0.71 EPS on revenue of $26.33 billion.

In its release, the company said for its critical cloud segment — which includes Azure as well as Software-as-a-Service products like Office 365 — said revenue grew 114 percent year over year. Revenue in the devices and consumer segment grew 8 percent to $12.9 billion.

But, [company]Microsoft[/company] still derives a good chunk of its profits from the still-huge-but-not-fast growing PC market and there its age is showing. Revenue for Office commercial products and related services fell 1 percent, dinged by the transition to the SaaS-based Office 365 and declining PC sales.

Microsoft is claiming big time cloud momentum, much as IBM and SAP did last week. But it’s hard to suss out these numbers since the vendors all glom a lot of different things — including pieces of legacy software and services — into the category.

And, Microsoft’s issue is that it’s moving to cloud while from its traditional strength position in more sluggish on-premises software. It’s a tricky path — as it sells more SaaS software, it sells less of the pricier on-premises stuff. But then again, if it didn’t cannibalize its own business, someone else — [company]Google[/company]? [company][/company]? — would eat it anyway.


This story will be updated throughout today’s earnings call with Microsoft CEO Satya Nadella.


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