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Microsoft’s Profit Rises on Cloud Computing

January 26, 2017

Microsoft reported a 3.6% rise in quarterly profit on Thursday, powered by a surge in demand for the company’s flagship cloud platform Azure.

Shares of Microsoft (MSFT) were marginally higher at $64.34 in after-hours trading.

Since taking charge in 2014, CEO Satya Nadella has steered the company toward cloud services and mobile applications away from its slowing traditional software business.

The company’s “Intelligent Cloud” business, which includes Azure, rose 8% to $6.9 billion in the second quarter.

That beat analysts’ average estimate of $6.73 billion, according to research firm FactSet StreetAccount.

Revenue from Azure, which businesses can use to host their websites, apps or data, jumped 93% in the quarter. Sales had more than doubled in the preceding quarter.

The Azure platform competes with offerings from companies including, Alphabet’s Google, IBM, and Oracle

Microsoft does not give an absolute revenue figure for Azure. Amazon’s AWS, Azure’s biggest competitor, grew revenues 55% to $3.23 billion in its most recent quarter.

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Sales in Microsoft’s personal computing business, which includes its Windows software, fell 5% to $11.8 billion.

Worldwide PC shipments, which have been in decline since 2012, fell 5.7 in 2016 from a year earlier, according to research firm IDC. However, the market is showing signs of stabilization.

Nadella also orchestrated Microsoft’s biggest acquisition, the $26.2 billion deal for LinkedIn. The transaction closed last month.

LinkedIn contributed $228 million of revenue in the second quarter, Microsoft said. LinkedIn also reported a net loss of $100 million, or 1 cent per share, in the quarter.

Excluding items, Microsoft earned 83 cents per share.

The company’s net income rose to $5.20 billion, or 66 cents per share, in the second quarter ended Dec. 31, from $5.02 billion, or 62 cents per share, a year earlier. (

Adjusted revenue rose to $26.07 billion from $25.51 billion.

Microsoft’s shares had risen 23.2% in the past twelve months, compared with the 20.7% gain in the broader S&P 500 index.