Microsoft quarterly profit slips but tops forecasts

The company made a profit of $5 billion on $23.8 billion in revenue in the final three months of last year

Microsoft shares rallied after the tech colossus reported that quarterly profit was down but still better than what Wall Street expected.

Microsoft made a profit of $5 billion on $23.8 billion in revenue in the final three months of last year, it said, propelling the company's shares about 7% when the earnings figures hit, before giving up some of the ground.

Shares were up more than 3% to $53.64 in after-market trade, with analysts rejecting the notion that Microsoft was somehow past its sell-by date.

"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 realise the value of Microsoft's cloud technologies."

NPD Group analyst Stephen Baker told AFP that "People who think Microsoft is sliding into irrelevancy really need to re-evaluate how they see the company. They are a software-first company in a world that is increasingly about software."

The analyst credited Microsoft with having a "nice mix" of businesses and reasoned that while consumer products get a lot of attention, legions of people use productivity software or services on the job and off.

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 5% 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. The new operating system aims to be seamless across traditional computers and mobile devices such as tablets and smartphones.

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