Surface Pro 4 helps Microsoft make £3.8 billion in profits last quarter

Helping boost the quarter were gains in productivity and business processes, up 6% to $6.7 billion, and intelligent cloud, up 8% to $6.4 billion.

Excluding items, Microsoft earned 76 cents U.S. per share, beating analysts' average estimate of 68 cents U.S., according to Thomson Reuters.

Microsoft's phone revenue fell from $2.6bn two years ago to just $300m in the last quarter, making the Redmond software giant pretty much a non-player in a mobile market that is really divided between Google's Android and Apple's iOS.

Driving Microsoft's performance was its focus on "digital", the firm's chief executive Satya Nadella said. Its commercial cloud revenue run rate topped $13 billion. Following the release of the earnings report, the stock was up 5.5% at $60.42 in the after-hours trading session.

Azure public cloud revenues rising 116pc year-on-year means Microsoft has been vindicated in its vision for tech. Commercial Office 365 users rose to over 85 million in the quarter, up 40 percent year-on-year, and over 24 million consumers also used the services. Sales hit $6.7 billion, a 6 percent increase compared with the same quarter a year ago. The company continues to grow, engage, innovate, and build its addressable market.

That record high - eclipsing the previous high watermark of $59.97 set on December 30, 1999 - gave Microsoft a market capitalization of $472.4 billion. Server products and cloud services revenue increased 11 percent driven by double-digit annuity revenue growth.

At Productivity and Business Processes, revenue rose 6 percent to United States dollars 6.31 billion, while operating profit dipped 1 percent to USD 3.16 billion. Phone revenue declined by $799 million, or 72 percent, as the company continues to reduce the scope of its Windows Phone business.

Windows OEM revenue was flat year-over-year (flat in constant currency), slightly ahead of the PC market. Azure allows corporations to host their apps, websites or data and Chief Financial Officer Amy Hood said the use of the cloud more than doubled.

But there were some bright spots, according to Jack Gold, principal analyst at J. Gold Associates.

Vanessa Coleman

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