Microsoft's Q2 strong, but commercial cloud sequential revenue, bookings growth slows

Microsoft FY18 Q2 earnings: $28.9 billion in revenue backed by cloud, Office growth

The mood about the company on the Street has been thoroughly upbeat since the October report, with the company earning new fans-among them Joseph Bonner of Argus Research, who raised his rating to Buy from Hold shortly after the report, writing that CEO Satya Nadella has "shaken off past missteps".

In Microsoft's statement, the company didn't tout its commercial cloud annual revenue run rate for the first time in several quarters. Lastly, Microsoft's More Personal Computing division, which is often weighed down by products such as stagnating Windows licensing and the botched Windows Phone experiment, still managed to eek out a 2% growth for the quarter and bring in $12.2 billion in revenue. Analysts and investors following Microsoft have wondered if Azure's growth would begin to trail off as the overall revenue number gets larger.

"Customers are using our technology to create digital business solutions. Someone with a business model that is aligned with their long-term interests, deep technical innovation, and an understanding of the responsibility that goes along with this innovation", Nadella said. That marked the tenth straight quarter of Microsoft reporting that Azure revenue grew 90 percent or more on a year-over-year basis.

Reuters Microsoft Corp. beat Wall Street's profit forecast on Tuesday, helped by growth in its cloud computing business, but took a $13.8 billion one-time charge due to the new US tax law. Microsoft said that it has "not completed" its full account for further tax effects of the tax bill.

Also in the "Productivity and Business Processes" department, Office saw strong growth.

Gaming revenue grew 8% thanks to having the Xbox One X on the market for the three months ending in December 2017. Sony, which reports earnings Friday, led console sales for the year with its, that report said.

Bernstein's Mark Moerdler has been saying that Microsoft's cloud-computing service, Azure, can eventually hit the same size as the cloud leader,'s (AMZN) AWS.

Revenue in the Surface hardware business was only up 1% from the year-ago quarter, despite the availability of several new laptops and tablets during the holiday shopping season. For more analysis of Microsoft, visit the IBD Stock Checkup.

But sales of other Surface devices were somewhat moribund.

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