Microsoft Delivers Mixed Quarter Amid Economic Freefall

Microsoft posted a net income of $16.4 billion on revenues of $52.7 billion for the dismal quarter ending December 31. Net income decreased by 12 percent year-over-year (YOY) while revenue was up just 2 percent.

“The next major wave of computing is being born, as the Microsoft Cloud turns the world’s most advanced AI models into a new computing platform,” Microsoft CEO Satya Nadella said. “We are committed to helping our customers use our platforms and tools to do more with less today and innovate for the future in the new era of AI.”

Microsoft’s Intelligent Cloud business was the star this past quarter, which revenues up 18 percent to $21.5 billion. Server revenue was up 20 percent, and Azure revenues were up 31 percent. But Microsoft also noted that its so-called “Microsoft Cloud”—not a real business—revenues were $27.1 billion in the quarter, up 22 percent YOY.

Productivity and Business Processes was Microsoft’s second-biggest business, with $17 billion in revenues, a gain of 7 percent. Office Commercial revenues were up 7 percent, while Office Consumer revenues decreased 2 percent.

And Microsoft’s More Personal Computing business cratered in the quarter, with revenues nose-diving 19 percent to $14.2 billion. PC sales were a big part of the problem, with Windows OEM revenues down an incredible 39 percent in a holiday quarter. But revenues from devices—Surface and HoloLens—were down 39 percent, too, Xbox content and services revenues fell 12 percent, and overall gaming revenue was down 13 percent.

“We are focused on operational excellence as we continue to invest to drive growth,” Microsoft CFO Amy Hood said. “Our commercial offerings continue to drive value for our customers.”

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