Microsoft's Q3 strong, commercial cloud on $6.3 billion annual run rate

Microsoft puts its commercial cloud lineup on a $6.3 billion annual run rate, which is on par with what Amazon Web Services is putting up. Enterprise carries team Microsoft.

Microsoft on Thursday delivered a better-than-expected fiscal third quarter that highlighted how the company's enterprise and cloud businesses are delivering strong results.

The company reported third quarter net income of $4.98 billion, or 61 cents a share, on revenue of $21.73 billion, up 6 percent from a year ago. Wall Street was looking for earnings of 51 cents a share on revenue of $21.06 billion.

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Microsoft's results include $190 million in restructuring expenses related to the Nokia devices unit. In constant currency, Microsoft's revenue growth would have been 9 percent.

By unit, the most notable takeaway is that Microsoft's enterprise cloud revenue is on a run rate of $6.3 billion. Amazon released its first quarter Amazon Web Services data. For first quarter, AWS had operating income of $265 million on revenue of $1.566 billion.

Assuming no growth for Microsoft or AWS, the companies will be roughly the same size for the enterprise cloud units. AWS' first quarter revenue annualized equates to $6.26 billion.

For Microsoft, the device and consumer division saw revenue jump 8 percent to $9 billion. Surface revenue was $713 million, up 44 percent from a year ago. Microsoft also sold 8.6 million Lumia smartphones.

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Commercial revenue was $12.8 billion, up 5 percent from a year ago. Server products and services saw sales gains of 12 percent in the quarter and cloud revenue jumped 106 percent.

As the following results show, the bottom line for Microsoft is carried by the enterprise.

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