Microsoft quarterly earnings surge on cloud computing

Microsoft's revenue exceeded market expectations as demand for cloud computing and PCs powered by its software picked up during the pandemic. — AP Photo

Microsoft on Tuesday reported quarterly earnings the blew past market expectations, fueled by demand for cloud computing and Windows-powered machines.

The US tech titan said it made a profit of US$20.5bil (RM85.04bil) in the recently ended quarter on revenue that climbed to US$45.3bil (RM187.93bil) in a 22% increase from the same quarter last year.

Microsoft's cloud computing unit generated $20.7bil (RM85.87bil) in revenue in the quarter, up 36% in a similar year-over-year comparison, according to chief financial officer Amy Hood.

"Digital technology is a deflationary force in an inflationary economy," Microsoft chief executive Satya Nadella said in an earnings release.

"Businesses – small and large – can improve productivity and the affordability of their products and services by building tech intensity."

The amount of money Microsoft took in from its Windows operating software being built into computers made by electronics companies increased 10% despite chip shortages that have vexed that industry, according to the earnings report.

Personal computer (PC) sales – which had been waning in a world increasingly obsessed with smartphones – revived during the pandemic, as users relied more on home internet connections for work, school and social life.

"The PC today is more central than it's ever been," Windows chief product officer Panos Panay said early this month during an AFP interview.

"Working through the pandemic, you start to realise the benefit and power of the larger screen; the keyboard, mouse, touch, pen, voice."

Wedbush analyst Dan Ives expected spending on cloud computing by businesses to rocket in the coming decade, and saw Microsoft as well-positioned to ride the trend.

"With workforces expected to have a heavy remote focus, we believe the cloud shift is just beginning to take its next stage of growth globally," Ives said in a note to investors.

"We believe the strong numbers from Nadella & Co. are a broader indication of strength we expect to see across the enterprise cloud software landscape throughout this earnings season." – AFP

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