[This story is running in the print edition of The Seattle Times Oct. 24, 2014.]
Microsoft beat Wall Street expectations for its fiscal first-quarter earnings with a combination of solid strength among its corporate customers, a fast-growing cloud business, and surprising progress in the consumer-hardware market.
For the quarter ended Sept. 30, Microsoft on Thursday reported revenue of $23.2 billion, profit of $4.54 billion and earnings per share of 54 cents.
Wall Street was expecting revenue of $22 billion, a profit of $4.34 billion and earnings per share of 49 cents, according to a consensus of analyst estimates compiled by Bloomberg.
Microsoft’s server business continued solidly. And its commercial cloud business logged triple-digit revenue growth.
Its Surface tablet, meanwhile, tallied a positive gross margin for the first time. And its Xbox One consoles logged solid sales, especially after Microsoft began selling in June a version of the console that did not include the Kinect sensor for $100 less.
“The devices and consumer business was not as weak as people expected,” said Norman Young, an analyst with Morningstar.
For the year-ago quarter, Microsoft reported sales of $18.53 billion, profit of $5.24 billion and earnings per share of 62 cents.
This reporting period covers the first waves of layoffs to eliminate 18,000 jobs by July 2015. Microsoft has already cut about 15,000 people.
The layoffs as well as the continuing integration of Nokia’s phone business were reflected in the lower profit and earnings per share figures.
The 54 cents earnings per share included 11 cents of restructuring and integration charges related to the layoffs and the Nokia integration, said Chris Suh, Microsoft’s general manager of investor relations. Excluding that, earnings per share would have been 65 cents, up 5 percent from a year ago.
For the quarter, the company incurred about $1 billion in restructuring charges, which included severance expenses and costs primarily associated with consolidating facilities.
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