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Microsoft Cloud Business Fuels December-Quarter Beat

Software heavyweight Microsoft (MSFT) late Wednesday easily topped Wall Street's targets for the December quarter, thanks to a strong showing by its cloud computing business, but investors were unimpressed.

Microsoft shares fell 1.6% in after-hours trading on the stock market today. During the regular session, Microsoft rose 2.5% to 95.01, just below its all-time high of 95.45, reached on Monday.

Microsoft reported adjusted earnings per share of 96 cents, up 20% year over year, on sales of $28.9 billion, up 12%, for its fiscal second quarter. Analysts expected 86 cents and $28.35 billion, according to Zacks Investment Research.

Microsoft did not give March-quarter guidance in its earnings news release. Wall Street has been modeling Microsoft to earn 79 cents a share, up 8% year over year, on sales of $25.42 billion, according to Zacks.

"This quarter's results speak to the differentiated value we are delivering to customers across our productivity solutions and as the hybrid cloud provider of choice," Microsoft Chief Executive Satya Nadella said in a news release. "Our investments in IoT (Internet of Things), data, and AI (artificial intelligence) services across cloud and the edge position us to further accelerate growth."


IBD'S TAKE: Microsoft stock has an IBD Composite Rating of 93 out of a best-possible 99. For more analysis of Microsoft, visit the IBD Stock Checkup.


Microsoft's Productivity and Business Processes unit, which includes its Office, Dynamics and LinkedIn businesses, saw revenue jump 25% to $9 billion in the quarter.

The company's Intelligent Cloud unit, which includes server and Azure cloud infrastructure services, saw revenue rise 15% to $7.8 billion.

Microsoft's Other Personal Computing, its largest division, saw sales creep up 2% to $12.2 billion. This division includes the Windows operating system, Xbox video games, Surface computers and Bing internet search advertising sales.

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