Microsoft Results Top Estimates

(RTTNews) - Software giant Microsoft Corp. (MSFT) said Thursday after the markets closed that its third quarter profit fell 12% from last year, as higher costs and expenses more than offset a 6% increase in revenue.

However, the company's quarterly earnings per share came in above analysts' expectations as did its quarterly revenue.

"Customers continue to choose Microsoft to transform their business and as a result we saw incredible growth across our cloud services this quarter," said Satya Nadella, chief executive officer at Microsoft.

Microsoft shares are currently gaining 3.14% in after hours trading after closing the day's regular trading session at $43.34, up 35 cents. The shares trade in a 52-week range of $38.51 to $50.05.

Nadella, who took over the helm in February last year, has been focusing on cloud-based business services. At the same time, he wants a slimmer and simpler Microsoft. In July, Microsoft announced plan to eliminate up to 18,000 positions over the next year, as part of a restructuring plan to simplify its operations and align the Nokia Devices and Services business with the company's overall strategy. Microsoft acquired Nokia's handset business in April last year.

For the third quarter ended March 31, 2015, the world's biggest software company reported net income of $4.99 billion or $0.61 per share, compared to $5.66 billion or $0.68 per share for the year-ago quarter.

The latest quarter results include $190 million of integration and restructuring expenses, or a $0.01 per share negative impact, related to Microsoft's restructuring plan announced in July 2014 and the ongoing integration of the Nokia Devices and Services business.

On average, 28 analysts polled by Thomson Reuters expected the company to earn $0.51 per share for the third quarter. Analysts' estimates typically exclude special items.

Redmond, Washington-based Microsoft said revenue for the third quarter rose 6% to $21.73 billion from $20.40 billion in the same quarter last year, thanks to the acquisition of the Nokia Devices and Services business. Thirty analysts had a consensus revenue estimate of $21.06 billion for the third quarter.

A stronger U.S. dollar significantly impacted the company's results in the quarter. Excluding the effect of foreign exchange rate changes, revenue would have increased 9% and earnings per share would have declined 7% from a year earlier, the company said.

The company's Devices and Consumer revenue increased 8% to $9.0 billion in the third quarter. Surface revenue for the quarter jumped 44% to $713 million, driven by Surface Pro 3. Office 365 Consumer subscribers increased to over 12.4 million, up 35% from the prior quarter.

Windows OEM Pro revenue fell 19%, as Pro mix returned to pre-Windows XP end-of-support levels and the business PC market declined, while Windows OEM non-Pro revenue declined 26%, mainly due to channel inventory drawdown and ongoing mix shift to opening price point devices.

Microsoft will launch the much-awaited new version of its operating system, Windows 10, in July.

The company generated phone hardware revenue of $1.4 billion during the first quarter, with 8.6 million Lumia units sold.

The company's commercial revenue grew 5% to $12.8 billion in the third quarter. Commercial cloud revenue surged 106% from a year ago, driven by Office 365, Azure and Dynamics CRM Online.