SAN FRANCISCO — Microsoft’s hardware battles are denting earnings. It was smart phones, and this timeÂ it’s that the Surface computer line.
Gains at theÂ Redmond, Wash. computer giant jumped 28 percent to $4.8 billion in its fiscal third quarter. Sales soared, gaining 8 percent to $22 billion.
Those gains are largely thanks to Microsoft’s cloud-computing division. Not helping: hardware. Personal computing sales fell 7% to $8.8 billion, dogged by a 26% fall in Surface sales.
Surface tablets would be the organization’s most important achievement in the hardware space, after Microsoft got out of the smartphone market in the wake of its unsuccessful investment in Nokia. Though its HoloLens augmented reality headset signifies a powerful entry in what might be a new age of computing, that wager is still a ways from paying off.
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“The Surface reduction was fiscally important, but I really don’t see a strategic issue,” states Patrick Moorhead, president of Moor Insights & Strategy.
“Microsoft opted for a Surface line refresh in November and included a substantial, new product, Surface Studio,” he says. “Studio accessibility was not large and Surface competitors did major revamps incorporating new industrial designs with the latest elements and latest interfaces. All this changed Surface earnings.”
By comparison, earnings in its cloud industry jumpedÂ Â 11% to $6.7 billion on the back of a 93% increaseÂ Â in Azure revenue.
The business reportedÂ third-quarter adjusted earnings per share Thursday of 73Â cents on corrected earnings of $23.6 billion. Those numbers beat analyst EPS expectations of 70 cents, and met revenue estimates of $23.6Â billion, based on S&P Global Market Intelligence.
Microsoft’s otherwise buoyant inventory drop around 3 percent in after-hours trading, after closing up 0.6 percent for an all-time high of $68.24.
The Redmond, Wash-based firm has been moving aggressively to establish itself as a preeminent option for enterprise clients. Microsoft recently rolled Microsoft Teams, its take on enterprise communication tool Slack.
And last month, the companyÂ Â Â took advantage of its own large outlay for LinkedIn and unveiled aÂ product for sales specialists, Revenue Navigator, which now sets it in competition with companies such as Salesforce.
Microsoft stated LinkedIn, which itÂ Â bought last summer for about $ 26 billion,Â contributed revenue of $975 million in the quarter.