By Canadian Press

Microsoft’s cloud growth pleases Wall Street

Apr 24, 2019 | 3:45 PM

REDMOND, Wash. — Microsoft’s ongoing push to get automakers, retailers and other businesses onto its cloud computing platform helped power the company’s third-quarter earnings ahead of Wall Street expectations Wednesday.

The software maker posted fiscal third-quarter earnings of $8.8 billion, up 19% from the same period last year. The Redmond, Washington-based company said it had profit of $1.14 per share, beating the $1 per share anticipated by analysts.

Microsoft also topped forecasts with $30.6 billion in reported revenue, a year-over-year increase of 14%. Eleven analysts surveyed by Zacks had expected $29.8 billion.

Amid a decline in its legacy Windows software business, much of Microsoft’s growth in recent years has come from selling its cloud services to other businesses and governments.

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Microsoft Chief Financial Officer Amy Hood said in a statement Wednesday that revenue from the company’s “commercial cloud” segment grew 41 per cent year-over-year to $9.6 billion.

ExxonMobil announced in February a deal to tap into Microsoft’s cloud platform and artificial intelligence to capitalize on the shale oil boom in Texas and New Mexico.

Microsoft is battling Amazon for a multibillion contract to supply the U.S. military with cloud computing services. The Pentagon could award the contract as early as this summer. Microsoft has already won a smaller $480 million contract to build HoloLens augmented reality headsets for soldiers.

In the gaming sector, Microsoft said Wednesday that revenue from its Xbox division grew 5%, with 12% growth in software and services offsetting a decline in hardware sales. The company is preparing to launch its first diskless console next month as it braces for increasing competition from new forms of gaming, such as a Google’s console-free game streaming service due out later this year.

Microsoft shares have risen 23 per cent since the beginning of the year, while the Standard & Poor’s 500 index has risen 17 per cent. In the final minutes of trading on Wednesday, shares hit $125.07, an increase of 34 per cent in the last 12 months.

Microsoft said Wednesday it returned $7.4 billion in the quarter to shareholders in the form of share repurchases and dividends.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on TWTR at https://www.zacks.com/ap/TWTR

The Associated Press