Microsoft’s shares have fallen more than 4% after profits for its third quarter fell $1.2 billion, missing analysts’ expectations.
The tech giant posted a profit of $3.76bn (£2.6bn) for the quarter, down from $4.99bn in the same period last year.
Revenues were forecast to rise from $21.73bn to $22.09bn, but actually fell to $20.53bn. Microsoft said falling sales in its core personal computing business were behind the slump, with the quarter’s growth largely coming in its cloud business.
Kevin Turner, chief operating officer at Microsoft said: “Digital transformation is the number one priority on our customers’ agenda. Companies from large established businesses to emerging start-ups are turning to our cloud solutions to help them move faster and generate new revenue.”
The division’s revenues rose 3.3% to $6.1bn during the quarter, but operating profits were down 14%. And shareholders weren’t too impressed with the rate of growth of cloud revenues.
Dan Morgan, portfolio manager at Synovus Trust, which holds a Microsoft stake, said: “We would have liked to have seen 7% to 9% growth.
“We’re trying to validate this story that Microsoft is truly becoming a cloud company, and they’re not going to be relying on the desktop computer.”