Microsoft's Nadella says the cloud is big, but don't forget Windows in the PC world
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Microsoft (NASDAQ:MSFT) Chief Executive Satya Nadella spent most of his company's fiscal third-quarter earnings call on Tuesday talking about the success of the software giant's cloud services business.
This made sense, as Microsoft (MSFT) reported earnings and sales that topped Wall Street analysts' forecasts, thanks in part to cloud-related sales rising 32% from a year ago.
"[Our] digital technology will be the key input that fuels the world's digital output," Nadella said. "[Our results] were driven by continued strength of the Microsoft (MSFT) cloud." Evidence of that could be seen in Microsoft's (MSFT) Azure cloud business, where revenue grew 49% from a year ago.
With cloud sales in the spotlight, Microsoft (MSFT) reported a third-quarter profit of $2.22 a share, on $49.4 billion in revenue. Analysts had earlier forecast the company to earn $2.20 a share, on sales of $49.05 billion.
Microsoft (MSFT) Chief Financial Officer Amy Hood also said that for the company's fiscal fourth quarter, it expects sales to be in a range of $52.4 billion to $53.2 billion.
But, even with Microsoft's (MSFT) growing focus on its cloud-based business and sales, it was something that Nadella said late in the earnings call that suggested the company still knows the value of what has been its bread-and-butter for so many years: Windows.
When asked about the outlook for the PC market over the rest of 2022, Nadella replied that he believes in the "durability" of the Windows business due to a number of factors among Microsoft's (MSFT) enterprise and consumer customers.
"Windows is a socket for Office 365," Nadella said. "We just launched Windows 11, and we'll stay focused [with Windows] on business customers."
Nadella added that as the world continues to emerge from the Covid-19 pandemic, "the intensity of [Windows] usage has gone up, and with our large installed base, we have significant growth [opportunities]."
Nadella said that the reality of how many people continue to interact with Microsoft's (MSFT) technology in today's world is such that, "the PC remains an important category in people's lives."
Fueled by its third-quarter results, Microsoft (MSFT) saw its shares rise more than 4% in after-hours trading, Tuesday.