- Associated Press - Wednesday, October 24, 2018

REDMOND, Wash. (AP) - Microsoft Corp.’s expansion beyond its empire in personal computer software paid off again in its fiscal first quarter as it mined new revenue sources in online subscriptions, gaming and its LinkedIn professional networking service.

The Redmond, Washington, maker of Windows and Office software said Wednesday that it earned $8.8 billion during the three months ending in September, a 34 percent increase from last year.

Earnings per share came in at $1.14 to top the average estimate of 96 cents per share among analysts surveyed by Zacks Investment Research.

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Revenue rose 19 percent from last year to $29.1 billion, also easily topping the average analyst prediction of $27.7 billion, according to Zacks.

The results announced late Wednesday lifted Microsoft’s stock by 2.3 percent to $104.70 in extended trading, setting up the company to regain a chunk of what it lost earlier in the day in a broad sell-off of technology stocks.

Although Microsoft still brings in most of its money from sales and licensing of its Windows operating system and Office suite of programs installed on PCs, the company has been diversifying into lucrative new areas since Satya Nadella replaced Steve Ballmer as CEO 4 1/2 years ago.

Most significantly, Microsoft has been selling subscriptions that provide access to its software programs over internet connections so customers can use the software on any device, including smartphones and tablets. It also is hosting websites for other companies in competition against Amazon and Google. Revenue from its website-hosting operations, Azure, increased 76 percent from last year in the latest quarter, more than any other line of business.

Nadella also engineered a $26 billion acquisition of LinkedIn in 2016 to give it a foothold in employment services and business networking - two niches that appeal to the corporate customers that Microsoft increasingly is focusing on. Revenue from LinkedIn climbed 33 percent in the last quarter.

Microsoft also is hoping to get a boost after it completes another recent deal to buy computer coding hangout GitHub. That $7.5 billion acquisition is expected to close before the end of this year.

Video games also are lifting Microsoft, thanks largely to its Xbox console and popular titles such as Minecraft. The company’s gaming revenue during the fiscal first quarter increased 44 percent from last year.


Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research.

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