Microsoft Corp.’s share price up, reports first-quarter sales that surpass analysts’ estimates due to cloud-computing growth

The biggest software manufacturer in the world, Microsoft Corp., reported that its sales over the past quarter surpassed analysts forecasts due to cloud-computing growth and recovering personal-computer sales. The companys statement comes at a moment when Microsofts Chief Executive Officer Satya Nadella is trying to bring a new life to the U.S.-based company.

Daniel Ives, an analyst at FBR Capital Markets & Co., commented on the companys performance for Bloomberg: “This quarter was another step in the right direction for Microsoft. Cloud continues to put fuel in the engine for Microsoft as Nadella looks to steer this company towards its next chapter of growth.”

According to Microsofts statement, the Nokia handset unit, which was purchased by the company earlier in 2014, also posted a revenue larger than the one initially expected by analysts. The sales of the Azure cloud software and online versions of the companys office programs grew more than two times. Microsofts total revenue over the first fiscal three months ended September 30th, increased by 25% to reach $23.2 billion. This result topped analysts predictions pointing to $22 billion in revenues. The revenue increase, excluding Nokias mobile-phone division, amounted to 11% compared to a year earlier.

The Chief Financial Officer of the company, Amy Hood, noted that an increase in the gross profit margin would be a “sustainable improvement” in profitability due to the cloud-computing services, reducing the divisions expenses and higher capacity utilization.

The performance of the company and its results over the quarter back the belief of CEO Nadella that Microsofts focus needs to be on its online-based services and mobile devices. After taking up the position of Chief Executive Officer in February 2014, Mr. Nadella also revealed plans to eliminate 18 000 jobs in order to reduce costs in a lay-off program that would be the largest-ever job cuts program in the history of Microsoft.

Microsoft Corp. was 1.44% up to close at $45.02 per share yesterday, marking a one-year increase of 33.35%. The company is valued at $371.64 billion. According to CNN Money, the 28 analysts offering 12-month price forecasts for Microsoft Corp. have a median target of $50.00, with a high estimate of $56.00 and a low estimate of $34.00. The median estimate represents a +11.06% increase from the last price of $45.02.