Azure Remains Key to Microsoft's Future

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Microsoft Corp.'s cloud computing business fueled quarterly sales and profit that topped analysts' estimates, boosted by several new deals with large corporate clients.

Microsoft shares have gained 23 percent this year, topping the 17 percent increase in the S&P 500 Index.

Microsoft shares are trading near a record after rallying 34% over the past year.

"Leading organizations of every size in every industry trust the Microsoft cloud, " said Microsoft CEO Satya Nadella. Azure itself drove a 73% increase in revenue in the company's fiscal third quarter, a significant jump though a bit smaller than the 76% year-over-year increase in the previous quarter.

Microsoft said earnings improved to $1.14 per share (excluding certain items) compared to the $1.00 expected by analysts.

Operating income for the January-March 2019 quarter increased by 25 per cent to $10.3 billion while diluted earnings per share rose 20 per cent to $1.14. Total revenue for the quarter was $30.6 billion, a 14% increase year-over-year.

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Microsoft Chief Financial Officer Amy Hood said in a written statement issued on Wednesday that revenue from the company's "commercial cloud" segment grew 41% year-over-year to $9.6 billion.

The company's Intelligent Cloud division, which includes Azure and other cloud-based businesses, surged 22% YoY to $9.7 billion. Profit rose 19 percent to $8.8 billion.

That helps Microsoft, which generally sells business customers a pricier version of Windows and has many of its corporate clients on a regular licence for updates. The market values of all three companies change moment to moment, and after Apple and Amazon passed $1 trillion in value, their share prices eventually receded, bring the companies current market value below the $1 trillion mark.

Major companies are expected to continue the shift from enterprise data centers to cloud VMs (virtual machines), using services like Azure and AWS.

Microsoft has recently shifted its focus to cloud-computing technology, and the result is yet another strong quarter with rebounding sales on its Windows operating system.

The company's key online software suite Office and cloud led much of the positive results, with revenue up by 12% for the commercial side, driven by a 30% rise in revenue from Office 365 Commercial. This growth in server products was driven in part by the imminent end-of-life for Windows Server 2008 and SQL Server 2008. Here, revenue from LinkedIn also increased by 27 percent and the company highlighted that LinkedIn sessions also increased 24 percent.