Microsoft Lumia Smartphone Sales Down 73% In Latest Results

Those figures included a deferral of more than $1.5 billion in revenues related mostly to the July release of the new Windows 10 operating system, which represents a new model for how the company will distribute and update its flagship software.

Excluding one-time items, Microsoft earned 62 U.S. cents per share.

Adjusted revenue rose to US$22.08 billion from US$21.73 billion.

Its Productivity division, which includes Office 365, rose 1% to $6.5 billion while revenue at its Intelligent Cloud wing gained 3% to $6.1 billion.

Cloud is key to Microsoft's new strategy under Nadella and in the first quarter of 2016, this strategy continued to show fruitition with continued growth in its intelligent cloud division, which includes Azure.

"Windows OEM revenue declined two percent in constant currency, outperforming the PC market, driven by higher consumer premium device mix", the company revealed in its earnings report. Worldwide PC shipments fell 11.5% in the same period, according to research firm IDC.

This segment grew by 1 percent with cloud services and dynamics products posting the biggest growth rate at 9 percent.

The company has come to the realisation perhaps that there's more to personal computing than just computers, the traditional ones we've grown up with (at least us, pre-millennials). Microsoft's sales of Windows to computer makers fell 2 percent, better than the overall PC market but still demonstrating the impact of the sector's difficulties on Windows.

Microsoft had impressed investors in recent quarters with gains in selling Office software and developer tools via the Web, inroads in cloud-computing businesses pioneered by such Internet natives as Google, Amazon.com and Salesforce.com.

That headline grabbing conclusion stems from one line in yesterday's earnings release from Microsoft.

Consumer users of Office 365 grew 79% year-over-year, while the number of commercial users climbed 57%, the company said.

The software giant posted lower than expected earnings and profits for the latest quarter, sending shares down more than 4% in after-hours trading.

Now that's worrying because growing revenue and shrinking income for Microsoft means that margins are melting even faster (50% to 46% for productivity, 43% to 36% for the cloud). A large part of that decline was due to a 46 percent decline in sales of Windows Phones, and the company ended the quarter with a "relatively high" inventory of unsold Lumia devices on its hands, Hood said.

"There's still a long ways to go in terms of the multiple-year transition in the company from a Windows and on-premise software company to a cloud, mobile and service-oriented company", Parakh said.

But it's commercial cloud revenue that Microsoft is looking to as its growth engine over the next few years.

Source: Microsoft Lumia Smartphone Sales Down 73% In Latest Results