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Microsoft’s Profit Climbs 28 Percent with Shift to Web-Based Software

Microsoft reported a jump in quarterly earnings on Thursday, reflecting continued progress in the company’s shift toward web-based business software.

Revenue during the three months ended March 31 was up 8 percent from a year earlier, and net income surged 28 percent, as the Redmond company boosted sales of its profitable package of on-demand software and processing power.

Microsoft has retooled its operations in recent years in an effort to move away from the stagnant business of providing packaged software installed on new personal computers, and toward web-based business software tools aimed at technology buyers like corporate information-technology departments and software developers.

Two deals Microsoft announced this week are symbolic of that shift. UBS, the Swiss banking company, said it had shifted its risk-management tools to the Azure cloud-computing platform. Shipping giant Maersk said it was using Microsoft’s cloud-computing tools to store and analyze logistics data.

Sales in Microsoft’s “intelligent cloud” segment, which includes Microsoft’s server software as well as Azure, accounted for 39 percent of Microsoft’s operating income in the most recent quarter. Revenue in the segment was up 11 percent from a year earlier.

A decade ago, when sales of Windows and Office accounted for Microsoft’s entire operating income, those businesses either didn’t exist or had a fraction of their current profitability.

“Our results this quarter reflect the trust customers are placing in the Microsoft cloud,” Chief Executive Satya Nadella said in a statement.

Microsoft’s “commercial cloud,” a cluster of businesses that includes sales of the web-based Office 365 and Azure cloud-computing platform, were on track to bring in $15.2 billion over the course of a full year.

Overall, Microsoft’s revenue totaled $22.09 billion during the quarter. Net income rose to $4.8 billion. On a per share basis, net income was 61 cents, up from 47 cents a year earlier.

Those figures strip out sales of the…


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