(Microsoft CEO, Satya NadellaAP)
Microsoft shares hit a record high of more than $60 on Thursday as strength in its cloud business helped it beat Wall Street financial targets in its first fiscal quarter.
This is the first time Microsoft has set an all-time high since December 1999.
The PC industry that Microsoft once dominated is now in decline, but Microsoft’s strong performance in the quarter raised hopes that efforts to develop equally lucrative new businesses are paying off.
For the quarter, Microsoft reported (press release here):
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Earnings of $0.76 on an adjusted basis. Analysts were expecting $0.68 per share.
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Revenue $22.3 billion on an adjusted basis, up 2.3% from the same period in 2015. Analysts had expected $21.71 billion.
Microsoft stock was up more than 5% on strong higher and lower numbers in after-hours trading.
Here is the graph showing Microsoft’s new record:
(Screenshot/Google Finance)
Investors are looking for signs of continued growth in Microsoft’s most important cloud computing business as it moves away from selling boxed software and shifts to a subscription-based, usage-based billing model .
And they got it: Revenue for Intelligent Cloud, the business unit that encompasses Microsoft’s Azure cloud computing service and the rest of the company’s server and data center tools, grew 8 % to reach $6.4 billion. Azure’s revenue, in particular, was up 116% from the same period in 2015, according to Microsoft, though it doesn’t disclose specific financials for that company.
Productivity segment revenue increased 6% to $6.7 billion, largely driven by the Office 365 subscription cloud productivity service for both home and business. The Dynamics software business was also a major contributor, up 11% from the same period in 2015.
It’s not all good news, however: Microsoft’s More Personal Computing segment, which includes Windows, saw revenue fall 2% to $9.3 billion. While Microsoft says Windows licensing was flat from the same period in 2015, slightly ahead of the overall PC market decline, revenue from its struggling phone business fell 72% and Xbox revenue by 5%.
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