Microsoft Jumps as Surface Sales Double

Tickers in this article: MSFT

NEW YORK (TheStreet) -- Microsoft on Thursday reported fiscal second-quarter results that beat expectations on both earnings and revenue, as strong Surface sales growth helped offset continued weakness in Windows OEM.

The company reported earnings per share of 78 cents versus the average analyst estimate of 68 cents. Revenue came in at $24.52 billion, surpassing expectations of $23.68 billion.

During the quarter, both its software and services, and hardware segments posted increases.

Devices and Consumer revenue grew 13% to $11.91 billion, driven by strong Surface sale revenues. Surface sales more than doubled sequentially to $893 million in the second quarter from $400 million in the first quarter. Meanwhile, Bing search share grew to 18.2% and search advertising revenue grew 34%. The company sold 7.4 million Xbox console units into the retail channel, including 3.9 million Xbox One consoles and 3.5 million Xbox 360 consoles.

Windows OEM revenue declined 3%, as continued softness in the consumer PC market offset 12% growth in Windows OEM Pro sales.

Commercial revenue grew 10% to $12.67 billion, as Office 365 commercial seats and Azure customers both grew triple-digits. Overall, commercial cloud services revenue more than doubled. The segment's System Center showed continued strength with double-digit revenue growth.

Shares of Microsoft were jumping more than 2.5% to $37.01.

The overall positive results were offsetting some concerns about poor Lumia smartphone sales as Microsoft buys Nokia's mobile devices unit to help support  its sharpened devices and services focus.

-- Written by Andrea Tse in New York.

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