Microsoft crosses $1 trillion market cap after impressive Q3 earnings

Mountain View CA USA- Sept. 4 2016 Microsoft Silicon Valley Center. Microsoft SVC is the software giant's presence in the Silicon Valley of California

Microsoft Silicon Valley

Shares rose 3 percent after the bell, adding to the about 23 percent gain so far this year.

Fortunately, shares seem to be climbing once again with highs of $130.37 in pre-market trading at the time of writing, according to Android Police.

The deals reflect Chief Executive Officer Satya Nadella's efforts to draw some customers away from cloud market leader Inc. and ink more significant clients.

As its Windows software business steadily declines, much of Microsoft's growth now comes from selling its cloud services to businesses and governments.

Growth in that unit slowed to 73 per cent in the third quarter ended March 31 from 76 per cent in the second quarter.

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At the Intelligent Cloud division, which includes Azure and other enterprise cloud services, revenues rose 22 percent to Dollars 9.65 billion, and operating profit was up 21 percent to USD 3.21 billion.

Indeed, all of Microsoft's three major revenue segments exceeded Wall Street's expectations: Intelligent Cloud, $9.65B (consensus: $9.3B); Productivity and Business, $10.24B (consensus: $10B) and More Personal Computing, $10.68B (consensus: $10.5B).

Microsoft's "commercial cloud" revenue - which includes business use of Azure, Office 365 and LinkedIn - was $9.6 billion this quarter, up 41% from the previous year but down slightly from the 48% growth rate the previous quarter. The Redmond, Washington-based company said it had profit of $1.14 per share, beating the $1 per share anticipated by analysts. Microsoft and AWS are in the last stages of competing for a $10 billion Department of Defense contract, known as JEDI, after IBM and Oracle were recently ruled out. Of course you don't get any special prizes for going over the trillion dollar mark, but it is remarkable how values of tech companies in general, and Microsoft in particular, have gone up.

That helps Microsoft, which generally sells business customers a pricier version of Windows and has many of its corporate clients on a regular licence for updates. LinkedIn revenue also grew by 27%.

Elsewhere, Microsoft's Office 365 suite, which includes products such as Excel and Word, also continues to benefit from the move to the cloud, with commercial Office 365 sales growing by 30%, officials said. Hood forecast up to $10.75 billion in revenue for the unit for the fourth quarter. The gaming market is expected to decrease year-over-year, however, due to fierce competition from popular online games like Fortnite, Microsoft said on its earnings call.

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