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Microsoft Profit Tops View, But Revenues Miss - Update

Software giant Microsoft Corp. (MSFT), Wednesday reported a profit for the second quarter that trumped Wall Street's estimates by a penny, as cloud business continues to surge. However, revenues fell short of expectations as growth in several other product lines slowed down.

Redmond, Washington-based Microsoft reported second-quarter profit of $8.42 billion or $1.08 per share, compared to last year's loss of $6.30 billion or $0.82 per share.

On an adjusted basis, earnings for the quarter rose to $1.10 per share from $0.96 per share last year. On average, 28 analysts polled by Thomson Reuters expected earnings of $1.09 per share for the quarter.

Revenues for the quarter grew 12 percent to $32.47 billion from $28.92 billion last year. Analysts had a consensus revenue estimate of $32.50 billion for the quarter.

"Our strong commercial cloud results reflect our deep and growing partnerships with leading companies in every industry including retail, financial services, and healthcare," said CEO Satya Nadella. "We are delivering differentiated value across the cloud and edge as we work to earn customer trust every day."

Intelligent Cloud segment revenues, which includes its Azure on-demand computing services, increased 20 percent to $9.4 billion, with Azure revenues surging 76 percent.

Revenues in Productivity and Business Processes rose 13 percent to $10.1 billion, with office commercial products and cloud services revenue up 11 percent driven by Office 365 commercial revenue growth of 34 percent.

Revenues in More Personal Computing segment, which includes Windows operating system, increased 7 percent to $13.0 billion.

"Our solid execution delivered another strong quarter, with commercial cloud revenue growing 48% year-over-year to $9.0 billion," said Amy Hood, executive vice president and chief financial officer of Microsoft. "We continue to make strategic investments to capture expanding market opportunities to drive growth across our businesses."

Under Satya Nadella, Microsoft has been transforming itself and focusing more on cloud-based services.

MSFT closed Wednesday's trading at $106.38, up $3.44 or 3.34%, on the Nasdaq. The stock, however, slipped $2.18 or 2.05% in the after-hours trade.

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