Microsoft earnings slip but still beat forecasts

Microsoft on Thursday reported quarterly profit slipped aslifestyles continued to shift from personal computers to mobile devices and Internetcloud software.The US software giant said that it made a profit of $5.66 billion on $20.4 billion inrevenue in the three months that ended on March 31, a slight dip from the $6 billion in net income it took in on $20.5 billion in revenue during the same period a yearearlier.While down slightly year-over-year, the quarterly earnings figures beat Wall Streetexpectations, bumping Microsoft shares more than two percent to $40.79 in after-market trading."This quarter's results demonstrate the strength of our business, as well as theopportunities we see in a mobile-first, cloud-first world," Microsoft chief executiveSatya Nadella said in the earnings release."We are focused on executing rapidly and delivering bold, innovative products thatpeople love to use."Nadella added that Microsoft is making progress in the increasingly importantconsumer market with services such as its Bing search engine and Office 365 Homesuite of programs hosted in the Internet cloud.Companies in the business software market that has long been Microsoft's strengthare also being won over to its cloud offerings, said Nadella.- 'Fighting weight' -Nadella, who took over as Microsoft chief in February, is benefitting fromrestructuring done by his predecessor Steve Ballmer, according to analyst RobEnderle of Enderle Group in Silicon Valley.Ballmer streamlined the management structure at Microsoft and made thetechnology colossus more responsive to customers, making it less likely they will belured away from its software.Microsoft also got a boost from an uptick in sales of its Xbox videogame consolesand Surface tablet computers -- it sold two million Xbox consoles, with more thanhalf of those its new-generation Xbox One.Revenue from Surface sales leapt by 50 percent to approximately $500 million andmoney brought in from Bing search ads was up 38 percent. Meanwhile, sales of Windows software to device makers grew four percent in thequarter, and the number of subscribers to Office 365 Home increased by a million to4.4 million, according to Microsoft."In general, Microsoft is reflecting the fact that this year it is just in better shape,it's more at fighting weight," Enderle said."Nadella will benefit from that, and hopefully build on it."Microsoft should also see benefits from shifts to newer versions of its operatingsystem software due to the recent end of support for aged but popular Windows XP.Though there has been a continued shift from personal computers to mobiledevices, Enderle said the trend was slowing."It looks like the days of rapid PC decline are behind us," he said. "People are seeingthey need a PC to do real work." Meanwhile, tablet sales are slowing in what is seen by some as a sign that market issaturated.