Xbox surge and cloud computing deliver boost for Microsoft

A surge in demand for new Xbox consoles as well as further growth in cloud computing has helped Microsoft deliver better-than-expected results over the Christmas quarter.

Shares climbed 4% in after-hours trading and added to big gains over the last year for the US tech giant, which is seen as one of the winners from the “stay-at-home” economy.

Revenues for the three months to 31 December were up 17% to $43.1bn (£31.3bn), beating analysts’ estimates of $40.2bn (£29.2bn), while profits climbed 33% to $15.5bn (£11.3bn).

Microsoft Chief Executive Officer Satya Narayana Nadella
Image:Chief executive Satya Nadella hailed a “second wave of digital transformation”

Microsoft said Xbox hardware revenues grew by 86%, driven by the launch of its latest models in November, while demand for contents and services for them were up by 40%.

Demand for the consoles had struggled to keep pace with supply amid a global semiconductor shortage.

The growth in Xbox revenues helped drive sales at the group’s wider personal computing division, which also includes Windows software, 14% higher to $15.1bn.

Meanwhile, the company reported 50% growth in its Azure cloud computing services division, suggesting that the software maker’s investment was paying off during the pandemic.

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The shift to working from home has accelerated businesses’ shift to cloud-based computing, benefiting Microsoft as well as Amazon, a rival in the sector.

Azure’s expansion was part of overall growth of 23% to $14.6bn for Microsoft’s “Intelligent Cloud” division – which also includes its Office software.

The logo for LinkedIn Corporation, a social networking networking website for people in professional occupations, is shown in Mountain View
Image:LinkedIn revenues posted a surprise recovery

There was also a surprise recovery in revenues on the LinkedIn professional social network, which grew by 23% – having previously dipped as the pandemic shut down businesses – and announced major job cuts.

Chief executive Satya Nadella said the past year had seen “the dawn of a second wave of digital transformation sweeping every company and every industry”.

Mark Gibson

Graduates in Northwestern University, Evanston, Illinois 1990. Move to Los Angeles California in 2004. Specialized in Internet journalism.

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