Menu
Microsoft takes $13.8B tax charge amid continued cloud growth

Microsoft takes $13.8B tax charge amid continued cloud growth

The quarter was the 10th in a row of more than 90 per cent revenue growth for its flagship Azure cloud computing service

Credit: Dreamstime

Microsoft beat Wall Street's profit forecast on Tuesday, helped by growth in its cloud computing business, but took a US$13.8 billion one-time charge due to the new US tax law.

Stock of the world's largest software company, which have risen almost 15 per cent over the past 12 months, fell 1.2 per cent in after-hours trading.

The quarter was the 10th in a row of more than 90 per cent revenue growth for its flagship Azure cloud computing service, which directly competes with Amazon Web Services (AWS).

Amazon customers hoping to avoid being locked into one service could be helping growth, said Kim Forrest, an equity analyst at Fort Pitt Capital Group.

"If you're really smart you'll have not one provider but two," she said.

Since Chief Executive Satya Nadella took the helm in 2014, Microsoft's cloud business -- which includes products such as Office 365, Dynamic 365 and Azure -- has emerged as a major growth area.

Revenue from what Microsoft calls its intelligent cloud segment rose 15.3 per cent to US$7.8 billion in the company's fiscal second quarter, including 98 per cent growth for Azure. Analysts on average had expected US$7.51 billion.

AWS is the leader of the US$14.4 billion cloud computing market with more than 31.8 per cent market share, but Azure has been growing fast and holds the No. 2 position with 13.9 per cent of the market, according to 2017 third quarter estimates by research firm Canalys.

Microsoft's tax charge lead to a net loss of US$6.30 billion, or 82 cents per share, in the quarter ended Dec. 31, compared to a profit of US$6.27 billion, or 80 cents per share, a year earlier.

Excluding one-time items it earned 96 cents per share, beating analysts' average expectation of 86 cents.

"If they are the only company taking a onetime tax write off that would be disconcerting but the fact that nearly everyone is doing it implies it is not a big deal," said Adam Sarhan, chief executive of 50 Park investments, an investment advisory service.

Revenue climbed 12 per cent to US$28.92 billion, beating analysts’ expectations of US$28.40 billion.

(By Salvador Rodriguez and Pushkala Aripaka; editing by Bernard Orr and Bill Rigby)


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags CloudMicrosoftamazonazureAWS

Brand Post

Featured

Slideshows

Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomed 2018 inductees - Chris Simpson, Kendra Ross and Phill Patton - to the third running of the Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed the changing landscape of the technology industry in New Zealand, while outlining ways to attract a new breed of players to the ecosystem. Photos by Gino Demeer.

Reseller News welcomes industry figures for 2019 Hall of Fame lunch
Upcoming tech talent share insights at inaugural Emerging Leaders Forum 2019

Upcoming tech talent share insights at inaugural Emerging Leaders Forum 2019

The channel came together for the inaugural Reseller News Emerging Leaders Forum in New Zealand, created to provide a program that identifies, educates and showcases the upcoming talent of the ICT industry. Hosted as a half day event, attendees heard from industry champions as keynoters and panelists talked about future opportunities and leadership paths and joined mentoring sessions with members of the ICT industry Hall of Fame. The forum concluded with 30 Under 30 Tech Awards across areas of Sales, Entrepreneur, Marketing, Management, Technical and Human Resources. Photos by Gino Demeer.

Upcoming tech talent share insights at inaugural Emerging Leaders Forum 2019
Show Comments