Microsoft flying high in the cloud

Software giant Microsoft has reported better-than-expected quarterly revenue, with stronger sales of its cloud-computing products for companies.

The gross profit margin in the division that includes its Azure cloud platform nearly doubled, despite rising infrastructure costs, including the huge expense of building and operating datacenters.

The results allayed recent fears of investors that the industry shift toward lower-margin cloud services was proving hard for established technology leaders to master.

“In light of recent negative earnings results from tech bellwethers Oracle, IBM, SAP, VMware, and EMC, Microsoft is bucking the trend and we would label these September results as a solid accomplishment,” said Daniel Ives, an analyst at FBR Capital Markets.

Nomura analyst Rick Sherlund figures Microsoft is on track to hit $6 billion a year in cloud revenue soon, which would make it the industry’s largest cloud vendor by his calculations.

That represents only about 6 percent of overall expected revenue this fiscal year, but investors are highly sensitive to a business they see as key to the future.

Mobile devices – which have been a drag on profits in the past – also did well for Microsoft

It shifted 9.3 million Lumia smartphones in the quarter and Surface tablet sales more than doubled from the same period last year.

with Reuters