Microsoft beats Wall Street on new CEO debut

SEATTLE Thu Apr 24, 2014 9:03pm EDT

The Microsoft logo is seen at their offices in Bucharest March 20, 2013. REUTERS/Bogdan Cristel

The Microsoft logo is seen at their offices in Bucharest March 20, 2013.

Credit: Reuters/Bogdan Cristel

SEATTLE (Reuters) - Microsoft Corp's (MSFT.O) new chief executive got off to a winning start with Wall Street on Thursday as the world's largest software company eased past analysts' profit estimates despite the pressure of falling computer sales.

Its shares rose almost 3 percent in after-hours trading to $40.96, keeping the stock at levels not seen since the turn-of-the-century Internet stock boom.

Microsoft shares are up about 8 percent since company veteran Satya Nadella took over as CEO in early February, and are up 19 percent since his predecessor Steve Ballmer announced plans to retire last August, easily outpacing the Standard & Poor's 500 .SPX.

Investors are excited about Nadella's focus on mobile and cloud, or Internet-based, computing, designed to take Microsoft beyond its traditional PC-based Windows business. Nadella is set to face analysts' questions for the first time in public on a conference call later on Thursday.

"This quarter is a nice step in the right direction for Nadella and Microsoft," said Daniel Ives, an analyst at FBR Capital Markets. "We would characterize these results as solid in a choppy IT spending environment."

Nadella's emphasis on cloud computing helped its server software business, while a softer-than-expected decline in PC sales limited damage to the bottom line.

The Redmond, Washington-based company reported quarterly profit of $5.66 billion, or 68 cents per share, compared with $6.05 billion or 72 cents in the year-ago quarter.

The decline was exaggerated by deferred revenue boosting the year-ago figure, and the latest quarter's profit beat Wall Street's average estimate of 63 cents per share, according to Thomson Reuters I/B/E/S.

Sales fell 0.4 percent to $20.4 billion, meeting analysts' average estimate.

Personal computer sales fell by as much as 4.4 percent in the quarter, according to the two major technology research firms, making the eighth straight quarter of declines as tablets and smartphones gain in popularity.

That decline was likely muted by the end of Microsoft's support for its decade-old Windows XP system in early April, which appears to have prompted many people to buy a new computer.

(Editing by Cynthia Osterman and Matthew Lewis)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

How to get out of debt

Financial adviser Eric Brotman offers strategies for cutting debt from student loans and elder care -- and how to avoid money woes in the first place.  Video