Microsoft had sort of a lousy quarter that looks worse because of factors beyond its control.
The software giant posted lower than expected earnings and profits for the latest quarter, sending shares down more than 4% in after-hours trading.
Microsoft (Tech30) continued to do well in its cloud computing businesses, and Windows sales seem to have stabilized. But Microsoft faced higher taxes and took a hit from a stronger U.S. dollar. ,
First quarter of 2015: $5 billion
First quarter of 2016: $3.8 billion
Part of the reason the company’s profits fell 25% was due to a higher than expected tax rate and a strong U.S. dollar.
First-quarter 2015: $21.7 billion
First-quarter 2016: $20.5 billion
Sales were impacted by the ever-shrinking PC market and, again, the impact of the strong dollar.
First-quarter 2015: Sales were down across the board.
First-quarter 2016: Sales for the consumer version grew 15%, while the enterprise version saw an 11% decline.
Windows-based PCs have fallen from a 95% market share a decade ago to 90% today, according to Morningstar. That’s thanks to the rise of mobile devices and software from competitors like Apple (Tech30) and , Google (Tech30). ,
That trend continues to hit Microsoft, but seems like it may be leveling off.
First-quarter 2015: Consumer base reached 12.4 million.
First-quarter 2016: Sales of consumer products and cloud services climbed 6% and subscriber base grew to 22.2 million.
Office continues to be a steady driver of sales for Microsoft. In the past three months, Microsoft has benefited from growth in subscribers and higher sales for each Office 365 license.
First-quarter 2015: Total sales for commercial cloud products grew 106%, but that included Office 365 and other services under an old reporting model.
First-quarter 2016: Sales of Azure products and servers grew 120% alone
Azure is Microsoft’s cloud business, which competes with Amazon Web Services. Microsoft’s bottom line continues to benefit from its cloud-first strategy. But the costs associated with supporting Azure have grown as well. The company spent $267 million more this past quarter than last year on things like RD and new hires.
First-quarter 2015: Xbox Live monthly active users grew 30% to about 37 million.
First-quarter 2016: Xbox Live monthly active users grew 26% to 46 million.
Overall, sales from the company’s gaming division grew 4% to $64 million. That was driven by high growth in Xbox Live transactions and revenue from video games — Minecraft in particular.
But the company actually lost 2 million monthly active users compared to the 48 million people it reported last quarter.