Microsoft reported a 12 percent drop in quarterly revenues to USD 20.379 billion, hurt by the stronger dollar. Windows sales to computer makers were also 6 percent lower, as the launch of Windows 10 had yet to gain pace, and phone revenue fell 54 percent at constant exchange rates, as Microsoft scaled back its presence in the market. Excluding currency effects, revenue for the fiscal first quarter to September fell 2 percent, while adjusted operating profit was up 11 percent to USD 7.074 billion. Net profit was still up 2 percent on a reported basis to USD 4.620 billion, and adjusted EPS rose to USD 0.67 from USD 0.65 a year ago.
Under its new reporting breakdown, Microsoft reported the strongest revenue growth at the Intelligent Cloud division, which grew 8 percent, thanks to strong Azure and premium server product sales. The Productivity and Business Processes division also showed underlying revenue growth of 4 percent excluding currency effects, due to continued strength in Office sales. Microsoft counted 18.2 million Office 365 subscribers at the end of the period, more than double the 7 million a year ago.
The 'More Personal Computing' division performed less well, with sales down 17 percent and operating profit falling 4 percent, mainly due to the phones division. While Microsoft reported continued growth in gaming and the search market, the PC market remained depressed, and it continued to lose ground in smartphones. Further details on the number of phones sold were not disclosed.
