Shares dip despite rise in revenue.
By Raif Karerat
WASHINGTON, DC: Despite a rise in revenue, Microsoft reported a fall in its quarterly profit  that fell in line with Wall Street forecasts. Discount strategy, sluggish PC sales, and the impact of a strong U.S. dollar all contributed to what many analysts considered a disappointing second quarter.
The Redmond-based company’s second quarter earnings dipped to 71 cents per share, a significant decrease from 78 cents a share the year before.
While revenue did rise 8 percent to $26.47 billion from $24.52 billion a year ago, helped by Microsoft’s acquisition of Nokia’s mobile business, the cost of revenue also increased, meaning operating income fell slightly during the same period.
One of the most glaring disappointments for during the quarter was the Xbox, lower sales of which dragged computing and gaming hardware revenue down 11 percent to $4 billion.
However, Microsoft is beginning to regain momentum against Sony’s PlayStation 4 in the U.S. market after temporarily cutting the price of the Xbox One during the busy holiday season. In fact, Microsoft claimed the Xbox One was the bestselling console in the U.S. for November and December, although declined to provide any exact numbers.
The technology giant’s strongest performers were its server and cloud offerings. Revenue increased by 9 percent for server, while commercial cloud revenue grew by a colossal 116 percent thanks to Office 365, Azure, and Dynamics CRM.
Consumers are also starting to show more faith in the cloud, with 9.2 million individuals now subscribing to Office 365, up from 3.5 million at this time last year. However, the transition to cloud based services is still a work in progress, as indicated by the 25 percent drop in consumer revenue reported by Microsoft in the same breath.
Microsoft shares fell about 4 percent directly following the announcement of the company’s second quarter earnings.