Microsoft’s struggles with its hardware have again hit its earnings. First smartphones and now its Surface computers are hurting the software giant’s earnings.
Profit for the computer giant based in Redmond, Washington were up over 28% to end its fiscal windows 10 product key third quarter at $4.8 billion. Sales surged as well by 8% ending the three-month period at $22 billion.
The increases in sales and profit were thanks for the most part to its division of cloud-computing. The area not helping with sales or profit was its hardware.
Sales in its Personal Computing segment were down 7% to end the quarter at 48.8 billion, hit by a drop in sales of Surface that reached 26%.
Surface tablets have become the main achievement at the company in its hardware segment, after Microsoft left the smartphone market following its failed investment with Nokia.
Although its augmented reality headset HoloLens is a strong entry in what many feel could become a new computing age, the bet remains a long time from paying off.
The reduction by Surface in sales was significant both tactically as well as financially, but will not affect strategy said one analyst on Wall Street.
He added that Microsoft decided to make a line refresh with Surface last November and added a new significant product in Surface Studio.
Availability of Surface Studio was not high and competitors of Surface did huge revamps windows10explained.com adding new designs with the most recent components and interfaces, with all that impacting sales of Surface.
In contrast, Microsoft sales for the cloud business were up 11% to over $6.7 billion off a surge of 93% in revenue generated by Azure.
The company posted adjusted earnings per share for its third quarter of 73 cents on revenue that reached $23.5 billion.
The numbers beat expectations for EPS by analysts of 70 cents while meeting the estimates of revenue of $23.5 billion.
Microsoft stock has been quite buoyant but fell 3% in trading after the bell on Thursday.
The company has moved aggressively to establish its place as the best choice for enterprise clients. It recently rolled out Microsoft Teams its version of the enterprise tool for communications known as Slack.
Last month, Microsoft used the advantage it has in acquiring LinkedIn and launched a product for sales professionals known as Sales Navigator that puts it into direct competition with Salesforce and other companies.