An earnings beat had Microsoft (Nasdaq: MSFT) stock up as high as 4.4% in after-hours trading Thursday.
Microsoft's earnings of $0.78 a share were well above analyst expectations for $0.68 a share, and a slight increase over the year-ago number of $0.76. Revenue rose 14% to $24.52 billion.
Just about the only blight on the report was the 3% drop in sales of Windows to the consumer PC market.
Microsoft's enterprise businesses did especially well, with triple-digit growth in the numbers of customers of both Office 365 and Azure. The company said commercial Cloud services revenue more than doubled, and its server business gained market share.
Revenue from the Surface tablets more than doubled quarter-over-quarter to $893 million, indicating an improvement in Microsoft's mobile efforts, even if they still lag far behind the offerings from Apple Inc. (Nasdaq: AAPL) and devices running Google Inc.'s (Nasdaq: GOOG) Android operating system.
The message is clear: While Microsoft has stumbled on the consumer side, its efforts in the enterprise are thriving.
"You've seen strong traction on the cloud side with Azure and Office 365," Daniel Ives, an analyst at FBR Capital Markets & Co., told Bloomberg BusinessWeek. "The tablet cannibalization issue continues to be a major headwind for Windows sales."
Bing, Microsoft's search engine business eked out another small gain in market share, which search advertising grew an impressive 34%, a very promising sign for this division as it continues to chip away at Google's dominance.
The company also said it sold more than 7 million of its new Xbox One consoles; according to research firm NPD group, the gaming system was the top seller in the United States in December, overtaking the Sony PlayStation 4.
But while Wall Street welcomed the positive Microsoft earnings news, it would rather know the answer to this much bigger issue...
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.