Microsoft's cloud business stumbles

It's not the end of the world, but Microsoft's cloud business has suffered a hit, as growth slowed in the last quarter. It seems as the Redmond giant still has a lot to learn when it comes to the cloud.

According to the company's reports for its fiscal third quarter, revenue from its Intelligent Cloud offering, including the Azure on-demand computing services, grew three per cent, to a total of $6.1 billion. In constant currency, the gain was eight per cent, while Microsoft said Azure grew 120 per cent in constant currency. Profit for the unit fell 14 per cent, down to $2.19 billion.

Looking at a quarter earlier, the slowing down is obvious. Back then, the same segment grew five per cent, 11 per cent in constant currency. Azure has seen a 140 per cent jump.

It's not the end of the world, but it was enough to scare investors and have the company's shares fall 4.8 per cent, to to $53.10 in after-hours trading.

Microsoft is still betting big on Azure, its business of renting computing infrastructure to other companies. “It remains clear we’re one of two leaders in this market,” Satya Nadella, Microsoft’s chief executive, said in a call with investors on Thursday.

Analytics have told the Wall Street Journal that Azure is just one tiny part of the company's overall revenue, and that it's still too young. More time is needed.

“That’s deceleration, for sure,” said Brendan Barnicle, an analyst at Pacific Crest Securities, for WSJ.“Those numbers are still so small, and it’s still so early,” he said.

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