Microsoft Surpasses Q3 Estimates But Profits Decline

Microsoft reported revenue and profit above Wall Street expectations. In the third quarter of the 2015 financial year, the company announced revenue up 6 percent to $21.73 billion, with gross margin up 1 percent to $14.57 billion.

However, the operating income declined 5 percent to $6.60 billion.

Share rose 3.1 percent to $44.70 in after-hours trading.

"The company beat across the board," said FBR Capital markets analyst Daniel Ives. "The Street will cheer these results as it appears Microsoft is back on the right track after a head-scratching performance last quarter."

The increment in revenue was attributed primarily to cloud and server software growth with Office 365 continuing to expand and Windows Server, System Center Server and SQL Server in particular showing strong performance.

Microsoft added that a $190 million cost due to the continued restructuring and integration of Nokia's Devices and Services business reduced operating income, as did the continued strength of the US dollar.

Taking out the effects of the strong U.S. dollar on currency rates, Microsoft said revenue would have risen 9 percent, Reuters reported.