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Microsoft has today announced its quarterly earnings for the third quarter of the fiscal year 2017. It has managed to meet most Wall Street analyst expectations, except for falling slightly short on the revenues front. The Redmond giant’s continued growth was once again led by its cloud and productivity properties, while sales for Surface devices slowed due to renewed competition from Apple.

In the said quarter, Microsoft has posted non-GAAP revenue of $23.56 billion on the back of earnings of 73 cents per share. The Wall Street bigwigs had suggested that the company would be earning 70 cents per share and report revenues of close to $26.2 billion. The Redmond giant posted earnings of 3 cents more than estimated but the slip in revenue caused its share price to tumble down from its highest point. They were trading about half a percent down at $67.85 during the earnings call. It has now recovered from the jolt.

Microsoft also shed light on other important financial figures to define the growth of their company. It reported that the non-GAAP operating income amounted to $7.1 billi0n whereas the net income stands at $5.7 billion for the third quarter. Also, Redmond giant returned $4.6 billion to its shareholders in the form of either share repurchases or dividends.

Talking about the quarterly earnings, Microsoft’s chief executive Satya Nadella in a statement said,

Our results this quarter reflect the trust customers are placing in the Microsoft Cloud.From large multi-nationals to small and medium businesses to non-profits all over the world, organizations are using Microsoft’s cloud platforms to power their digital transformation.

Further, Nadella’s strategy to focus on the growth of cloud and productivity divisions of the company continues to pay-off in the said quarter as well. Ever since he has assumed the role of chief executive earlier in 2014, he has shifted focus away from Redmond’s once prided Windows operating system. The fast growing cloud market has also helped the company counter the continuous slowdown in the PC and tablet market, with smartphones becoming more powerful and capable. The operating system, now called Windows 10, is being distributed in the form of a software service — via free over the air updates.

As for Microsoft’s Intelligent Cloud business, it reported an impressive 11 percent increase in revenues for the quarter ended March. It now amounts to $6.8 billion as compared to $6.1 billion revenue it reported in the same quarter previous year. Once again, it has posted bombastic growth number for its Azure cloud business, which has contributed heavily to the overall growth of the division. It has been reported that revenues were up 93 percent, thanks to increased demand for its core compute and premium services. Server and cloud product revenue increased 15 percent as a whole, with an aim to hit $20 billion run rate by 2020.

The productivity and business division, which includes everything ranging from Office and professional cloud products to LinkedIn (acquired by Microsoft last year for $26.2 billion), increased 22 percent in the third quarter. The revenues for the same stood at $8.0 billion. It was prominently driven by 45 percent revenue growth of the Office 365 commercial products, whose subscriber count has now increased by 26.2 billion. This means it has now crossed the 100 million subscriber milestone.

The revenue for the Dynamics and cloud products increased by 10 percent, where the growth was mainly driven by Dynamics 365. It witnessed a revenue growth of 81 percent. But, the highlight of this division will have to LinkedIn as this is the first quarter Microsoft has started accounting for its financials in its quarterly report. It was expected that the professional social network, which recently crossed the 500 million member milestone, would contribute about $950 million to the productivity division. But, it has contributed $975 million, which is slightly higher.

The “More Personal Computing” division has become a significant participant in the growth of the company since Surface lineup launched about a couple years ago. They form an important part of the revenues, excluding the dying Windows phone lineup, but they’ve also started moving on a downward spiral. The revenues decreased 7 percent and amounted to $8.8 billion in this quarter when compared to $9.5 billion a year ago in the same quarter.

With the launch of the MacBook Pro with Touch Bar, Surface Pro sales have been affected and this is reflected in the numbers. The Surface revenue decreased 26 percent, while other components of the said division such as Windows hardware, gaming, and search advertising all increased by around 4 to 8 percent.

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