Microsoft reports 12 drop in profits

Microsoft has seen its profits drop to $5 billion in the first three months of the year.

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By :  ,  Financial Analyst

It has been a tentative start to the year for Microsoft after the tech giant posted a 12 per cent drop in profits.

The company stated that profits were down to $5 billion (£3.3 billion) in the first three months of the year. It said in its latest trading update that the strengthening dollar had a "significant impact" on its results. The figures also included a $190 million charge which it used to reorganise its operations following the merger of Nokia's handset division.

It was boosted by its cloud computing division enjoying a boom in sales which doubled during the period. Microsoft is now confident that it will generate around $6.3 billion in annual sales to put pressure on its rivals.

One of the driving forces behind its positive sales was its Devices and Consumer sector. Revenue here grew by eight per cent to $9 billion and was helped by Office 365 Consumer subscribers growing to 12.4 million, a 35 per cent increase. Xbox Live usage was also up by 30 per cent thanks to an increase in user numbers and deeper user engagement.

Satya Nadella, chief executive officer at Microsoft, said: "Customers continue to choose Microsoft to transform their business and as a result we saw incredible growth across our cloud services this quarter.

"Next week at Build we're excited to share more about how we're empowering every individual and organisation on the planet to achieve more with the next generation of our platforms."

Boost in share price

Despite the fall in sales, Microsoft's share price remained buoyant on Friday (April 24th). The company saw the value of its shares grow by 0.83 per cent as 10:13 BST, a notable improvement following a series of falls during after-hours trading the day before.

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