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Microsoft loves the cloud but takes a hit on taxes

CEO Satya Nadella has made the cloud the linchpin of his strategy for getting companies to think about Microsoft products again. A "catch-up" tax adjustment cut into profit.

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Microsoft's sales were buffered by CEO Satya Nadella's emphasis on the cloud.

CNET

All things considered, Microsoft is having a better year so far than a lot of other big tech companies. The world's largest software maker on Thursday reported $22.1 billion in sales for its fiscal third quarter.

That figure, which includes deferred revenue, is in line with the average estimate of analysts surveyed by Thomson Reuters. Earnings, however, were 47 cents a share, compared with an average estimate of 63 cents. Microsoft said it made had a "catch-up" income tax expense during the period. After taking out certain costs such as employee stock compensation, profit was 62 cents a share. Analysts had expected 64 cents a share.

Sales were buffered by CEO Satya Nadella's emphasis on the cloud. Excluding the impact of foreign exchange rates on sales, Microsoft's "Intelligent Cloud" business rose 8 percent to $6.1 billion in the quarter, which ended March 31.

Compared to other tech companies, Microsoft's performance was strong.

Earlier this week, Intel said it would cut 11 percent of its workforce as it moves into the cloud computing market. IBM reported its 16th quarter in a row of falling sales -- and its worst quarterly results in 14 years. And even Netflix missed analysts' revenue estimates after expanding into almost every country in the world.

Shares fell nearly 5 percent in after-hours trading.