Microsoft’s solid Q4 bolstered by strong Xbox, Surface numbers

CEO Satya Nadella's got something to smile about

CEO Satya Nadella's got something to smile about

Microsoft has reported a year on year profit increase of around 17%.

Wall Street will be looking for continued signs of growth in Microsoft's all-important cloud business, which includes Microsoft Office 365 and the Microsoft Azure cloud computing platform.

"Microsoft has successfully come from behind to exceed Amazon's cloud revenue, and that gap is only increasing in Microsoft's favour", Mark Sami, vice president at consultancy firm SPR said.

"I don't see anything that should raise an eyebrow of concern", said Daniel Morgan, a portfolio manager at Synovus Trust who holds 418,716 Microsoft shares. The smash-hit console powered Nintendo to $9.7 billion in net sales for its fiscal year ending in March, up 105 percent from the year before. But the star, as always, was Azure, which grew revenues 89 percent.

"Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation", Mr. Nadella said on a conference call on Thursday.

Much of Microsoft's recent growth has been fueled by its cloud computing business, which has benefited from companies rushing to shift their workloads to the cloud to cut data storage and software costs.

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Raymond James is raising its fiscal 2019 and 2020 revenue and earnings-per-share estimates, given Microsoft's revenue beat and raise, and strong 2019 guidance for fiscal 2019 including a lower tax rate.

Surface revenue was up 25 percent to $1.2 billion, a reflection of the stronger product lineup today as compared to a year ago.

Leading the charge is the company's revenue was the company's cloud services which were up 53 percent to $6.9 billion.

Microsoft has announced technology partnerships with other major firms in recent months including General Electric, Starbucks, Bayer, Spain's Telefonica and sports organisations such as the National Basketball Association and PGA.

Intelligent cloud revenue was up 23 percent to $9.6 billion, with operating income up 34 percent to $3.9 billion.

Switching gears to the More Personal Computing category, revenue increased by 17 percent, moving up to $10.8 billion. Office commercial as a whole grew 38% (35% CC), which is driven by the Office 365 seat growth of 29%.

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