Microsoft quarterly profit slips but tops expectations

Microsoft shares rallied Thursday after the tech colossus reported quarterly profit was down but better than Wall Street had expected.

Microsoft said that it made a profit of $5 billion on $23.8 billion in revenue in the final three months of last year. The company's shares rose more than three percent to $54.08 in after-market trades.

"It was a strong holiday season for Microsoft highlighted by Surface and Xbox,? said chief operating officer Kevin Turner, referring to the company's tablet computer family and gaming console.

"Our commercial business executed well as our sales teams and partners helped customers realize the value of Microsoft's cloud technologies."

Software offered as a service in the Internet cloud has been a key aspect of the technology veteran's effort to adapt to a shift away from packaged software on which the US company was built.

Revenue from Microsoft Azure, which challenges cloud king Amazon Web Services, more than doubled while its overall "Intelligent Cloud" unit grew five percent to $6.3 billion, according to the earnings report.

"Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas," said Microsoft chief executive Satya Nadella.

"Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices."

Microsoft began rolling out its Windows 10 last year, aiming to revive the tech giant's fortunes, with the new operating system that aims to be seamless across traditional computers and mobile devices such as tablets and smartphones.

The number of people using Xbox Live online service for digital content and video game play climbed 30 percent to a record high of 48 million, Microsoft said.

Meanwhile, revenue from Windows operating system declined but outperformed the overall personal computer market, according to the Redmond, Washington-based company.

Windows remains the dominant PC platform but Microsoft has lagged rivals Apple and Google to power mobile devices such as tablets and smartphones.

Surface tablet computers were a bright spot for Microsoft, with revenue increasing 29 percent on the backs of the launch of Surface Pro 4 and Surface Book, according to the earnings report.