Microsoft Shares Soar After Cloud Spurs Earnings Beat

Including some adjustments, fiscal fourth-quarter revenue was $22.6 billion, compared with the average analyst estimate for $22.1 billion, according to data compiled by Bloomberg.

Revenue from Azure, the company’s corporate cloud platform, doubled in the quarter that ended June 30.

Profit, excluding certain items, was 69 cents a share, Microsoft said Tuesday in a statement. Analysts on average had forecast profit of 58 cents.

During the quarter, Microsoft recorded total charges of $1.11 billion, related to the restructuring of the phone business it acquired from Nokia and job cuts.

Shares reached $56.20, the highest since October. They were trading up 5.3 percent at $55.90 at 9:49 a.m. in New York. The stock gained 14 percent in the past year through Tuesday.

Microsoft continues to see businesses moving to the cloud and subscription-based software and services, Chief Financial Officer Amy Hood said via telephone. Transactional purchases of legacy products were “a little better this quarter,” she said.

“There’s a structural trend and shift to the cloud,” she said. In traditional products, “quarter to quarter, you see some volatility in the results.”

“The PC market was a little better than we had expected three months ago,” she said. “We saw it more specifically in more developed markets.”

Corporate versions of the Office 365 cloud-based productivity software saw revenue increase by 54 percent in the fiscal fourth quarter, the Redmond, Washington-based company said.

Net income was $3.12 billion, or 39 cents a share, including the Nokia-related charges, compared with a loss of $3.2 billion a year earlier.

Revenue in the Intelligent Cloud division rose 6.6 percent to $6.71 billion, compared with the $6.58 billion average estimate of analysts polled by Bloomberg. In the current period, Microsoft forecast unit sales of $6.1 billion to $6.3 billion.

Productivity group sales gained 4.6 percent to $6.97 billion. Analysts had projected $6.64 billion. In the fiscal first quarter, the company expects to report $6.4 billion to $6.6 billion.

More Personal Computing division sales, which include Windows and Xbox, fell 3.7 percent to $8.9 billion in the recent period, slightly better than the $8.87 billion average analyst estimate. Revenue will be $8.7 billion to $9 billion in the current quarter, Microsoft said.

Fourth-quarter unearned revenue, a measure of future sales, was $33.9 billion. Five analysts polled by Bloomberg expected an average of $30.88 billion.

Microsoft’s profit was boosted in the recent period by a more favorable tax rate. Minus the effects of that gain, profit would have been 63 cents a share, according to a research note from UBS Group AG analyst Brent Thill.

Microsoft in June agreed to buy professional networking service LinkedIn Corp. for $26.2 billion.

“What’s comforting is the key underlying trends are in place,” said Sid Parakh, a fund manager at Becker Capital Management, which owns Microsoft stock. “At least the long-term trajectory is intact here. There was concern last quarter.”

“Deferred revenue growth was pretty decent,” Parakh said.