Microsoft profit up amid cloud computing growth

Microsoft profit up amid cloud computing growth
People walk past a Microsoft office in New York (Swayne B Hall/AP)

Growth in Microsoft’s cloud computing business helped push its profit up 24% in the July-September quarter over the same time last year.

The tech company, based in Redmond, Washington, reported quarterly profit of 17.2 billion dollars (£12.5 billion), or 2.27 dollars per share, beating Wall Street expectations of 2.08 dollars per share.

Microsoft profits have soared throughout the pandemic thanks to ongoing demand for its software and cloud computing services for remote work and study.

It posted revenue of 45.3 billion dollars (£32.9 billion) in its fiscal first quarter, up 22% from last year.

31% Rise in sales from what Microsoft calls its 'intelligent cloud' segment from a year ago

Analysts had been looking for revenue of 44 billion dollars (£32 billion), according to FactSet Research.

Microsoft’s stock rose almost 2% in after-hours trading.

Sales from what Microsoft calls its “intelligent cloud” segment, which includes server products and its Azure cloud computing platform, were 17 billion dollars (£12.3 billion), up 31% from a year ago.

The company has been fiercely competing with Amazon, Google and other cloud providers for big business and government contracts.

There was relatively slower growth in Microsoft’s personal computing business segment, which includes Windows software licences for new computers.

Sales in the segment grew by 12% to 13.3 billion dollars (£9.6 billion).

Microsoft has been unveiling the next generation of its Windows software, called Windows 11, its first major update in six years.

42% Rise in revenue from LinkedIn from the same time last year

But the PC market has also been hit by supply chain problems.

Revenue from Microsoft’s LinkedIn jobs networking service increased 42% from the same time last year.

The company earlier this month announced it will be halting its localised version of LinkedIn in mainland China, citing tightening government restrictions affecting the only major Western social networking platform still operating in the country.

LinkedIn does not disclose how much of its revenue comes from China, but it reports having more than 54 million members in the country, its third-largest user base after the US and India.

Microsoft also reported a short-term tax benefit of 3.3 billion dollars (£2.4 billion) from its transfer of certain intangible property from its Puerto Rico subsidiary.

The company had come under the scrutiny of the Internal Revenue Service over how it structured a Puerto Rico facility starting in 2005, leading a federal judge last year to say Microsoft was likely trying to avoid or evade paying US taxes through its cost-sharing arrangement with the affiliate.

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