Phone Revenue Drop of 81%, Azure Revenue Growth of 91% in Second Quarter: Microsoft

Tech giant Microsoft recently reported a decline of 81 percent in revenue from phones in its second quarter of FY17. The company posted an overall revenue of $26.1 billion, up 1.2 percent from the year-ago period.

On the other hand, revenue for Microsoft's Intelligent Cloud segment rose by 8 percent to $6.9 billion, with its Azure cloud computing platform making a revenue growth of 93 percent year-on-year.

Also, Microsoft posted its net income of $6.5 billion, and earnings per share of $0.83 against its second quarter in 2016, in which the company had seen net income of $6.3 billion, and earnings per share of $0.78.

The company beat the expectations of the analysts who had expected Microsoft to earn $25.3 billion in revenue and earnings per share of $0.79. The company's stock was also up 0.93 percent in regular trading, but was relatively flat in after-hours trading. The tech company said it returned $6.5 billion to shareholders in the form of share repurchases and dividends during the quarter.

In a statement, the CEO Satya Nadella said that Microsoft's customers are seeing greater value and opportunity as they partner with them through their digital transformation. Further adding, he said that accelerating advancements in AI across their platforms and services will provide further opportunity to drive growth in Microsoft Cloud.

Microsoft's earnings results are broken into three operating groups. They are as follows:

More Personal Computing 

This segment includes results for Windows licensing and devices such as Surface, smartphones, and Xbox. It overall declined by five percent to $11.8 billion.

• Windows OEM revenue increased by five percent. Breaking down further, Pro revenue was up by six percent and non-Pro revenue by five percent.
• Surface revenue decreased by two percent.
• Phone revenue declined by a massive 81 percent.
• Advertising revenue from search, excluding traffic acquisition costs, grew by a good ten percent, attributed this to Windows 10 which includes tighter Bing integration.
• Gaming revenue declined by three percent. 

Intelligent Cloud

This segment includes results from server products and services including Windows Server and Azure. It grew overall by eight percent to $6.9 billion.

• Server products and cloud services revenue grew by 12 percent. Azure revenue grew by a huge 93 percent.

Productivity and Business Processes

This segment includes results from Office and Office 365 (commercial and consumer customers). It grew overall by ten percent to $7.4 billion.

• Office 365 has added less than one million subscribers for three quarters in a row to hit 24.9 million. Office commercial products and cloud services revenue grew by five percent, with Office 365 revenue up by 47 percent.

Microsoft's acquisition of LinkedIn contributed $228 million in revenue and lost $100 million beginning on December 8, 2016.