Games console lifts Microsoft’s revenue

Microsoft’s customers flocked to game consoles and cloud software last quarter, helping Steve Ballmer deliver results that topped projections in his last months as chief executive. Revenue rose 14% to a record US$24.5 billion (N$272 billion) in the fiscal second quarter to December last year, Microsoft said late on Thursday. Analysts had predicted US$23.7 billion (N$261 billion) on average, Bloomberg data showed. Ballmer, who has said he would retire by August, has kicked off Microsoft’s biggest transition in more than a decade. The largest software maker is in the middle of implementing a reorganisation and is working to close the acquisition of Nokia’s handset unit. Microsoft introduced the new Xbox One game machine in the holiday quarter and boosted sales of web-based software such as Azure and Office 365, even as its traditional programmes continue to languish along with personal computer (PC) shipments, which posted a record drop last year. “They continue to defy the sceptics,” Brent Thill, an analyst at UBS, said. “This company is outpacing every other large-cap enterprise company by miles. They’re doing the right things. The last part of this is you have to get the right head coach.” Shares of Microsoft rose 2.1% to US$36.81 (N$404.91) at the close in New York on Friday. The stock added 40% last year, compared with a 30% increase in the Standard & Poor’s 500 index. Sales of commercial cloud programmes like Azure and Office 365 more than doubled from the year-earlier quarter and the company sold twice as many Surface tablets as it did in the fiscal first quarter, according to chief financial officer Amy Hood. “We exceeded expectations in both the commercial unit and the devices and consumer segment and we saw improvement in areas where frankly we needed to get better,” Hood said, citing Surface and tablets as examples. The PC market was stabilising, she said, with corporate shipments rising for the third consecutive quarter and consumer PCs performing better than Microsoft anticipated, although she said demand remained soft as customers chose other devices. Most investors were more focused on the search for a chief executive than results, said Daniel Ives, an analyst at FBR Capital Markets. The board is narrowing down candidates. The list included Microsoft cloud computing chief Satya Nadella, Ericsson chief executive Hans Vestberg and former Nokia boss Stephen Elop, as well as other outsiders, people with knowledge of the selection process have said. Five months have passed since Ballmer said he would retire within a year, and the new chief executive will be stepping in at a crucial point as Microsoft moves away from its software roots.