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While Microsoft Reports a Positive Quarter, Surface Products Continue to be a disappointment

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While Microsoft delivered a positive Q3 earnings report, Surface products continue to be a disappointment. For Apple, strong iPhone sales is the most important thing analysts look for in the quarter and for Microsoft, it's all about the cloud with Surface products being a distant issue for analysts. Microsoft's numbers for the Cloud were excellent.



Earlier today Microsoft Corp. announced the following results for the quarter which ended on September 30, 2019, as compared to the corresponding period of last fiscal year:


  • Revenue was $33.1 billion and increased 14%
  • Operating income was $12.7 billion and increased 27%
  • Net income was $10.7 billion and increased 21%
  • Diluted earnings per share was $1.38 and increased 21%


Satya Nadella, chief executive officer of Microsoft: "The world’s leading companies are choosing our cloud to build their digital capability. We are accelerating our innovation across the entire tech stack to deliver new value for customers and investing in large and growing markets with expansive opportunity."


How did Surface products do in Q3? Surface fell 4%. Microsoft is hoping that they're new products announced earlier in October will push Surface to profitability for Q4.


Revenue in Productivity and Business Processes was $11.1 billion and increased 13% (up 15% in constant currency), with the following business highlights:


  • Office Commercial products and cloud services revenue increased 13% (up 15% in constant currency) driven by Office 365 Commercial revenue growth of 25% (up 28% in constant currency)
  • Office Consumer products and cloud services revenue increased 5% (up 6% in constant currency) with continued growth in Office 365 Consumer subscribers to 35.6 million
  • LinkedIn revenue increased 25% (up 26% in constant currency)
  • Dynamics products and cloud services revenue increased 14% (up 16% in constant currency) driven by Dynamics 365 revenue growth of 41% (up 44% in constant currency)


For more details read Microsoft's full press release.


Earlier this month Microsoft's Surface team surprised the market with a peek at a new line of foldable products that they're promising for Q4 2020 that could shake up the market.


While their videos were impressive, until they're products are in the market and open to reviews and testing, it's all smoke and mirrors. Microsoft is banking that their foldable trend will put a dent in Apple's bottom line. See our report for more.  



10.3 - Patently Extra News


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