Microsoft announced encouraging third quarter results today, stemmed from "bold bets" on cloud services.

Revealing revenues of US$20.49 billion, the software giant fell slightly short of analyst expectations, but beat the mark with $0.72 per share earnings.

CEO Steve Ballmer said the financial results reflect the net recognition of revenue related to the Windows Upgrade Offer, Office Upgrade Offer and Pre-Sales, and the Entertainment and Devices Division Video Game Deferral, partially offset by the European Commission fine.

“The bold bets we made on cloud services are paying off as people increasingly choose Microsoft services including Office 365, Windows Azure, Xbox LIVE, and Skype,” Ballmer said.

“While there is still work to do, we are optimistic that the bets we’ve made on Windows devices position us well for the long-term.”

Division by division:

The Microsoft Business Division posted $6.32 billion of revenue, an 8% increase from the prior year period, while the Server & Tools business reported $5.04 billion of revenue, showing an 11% rise compared to last year.

“Our enterprise business continues to thrive,” said Kevin Turner, chief operating officer, Microsoft.

“Enterprise customers are increasingly turning to Microsoft for their IT solutions and as a result, we continue to take share from our competitors in key areas including hybrid cloud, data platform, and virtualisation.”

The Windows Division posted revenue of $5.70 billion, a 23% increase, with the Online Services Division reporting revenue of $832 million, an 18% increase from the prior year period.

Microsoft also says online advertising revenue grew 22% driven by an increase in revenue per search.

The Entertainment and Devices Division posted revenue of $2.53 billion, an increase of 56% from the prior year period.

“Our diverse business continues to deliver solid financial results, even as we navigate the evolving device market,” said Peter Klein, chief financial officer, Microsoft.

“Looking ahead, we will continue to invest in long-term growth opportunities to drive our devices and services strategy forward and deliver ongoing value to shareholders.”

Ironically, Klein will leave the company at the end of the current fiscal year, after nearly eleven years at the company.

“I’ve had a great experience as CFO and overall in my time at Microsoft,” Klein said.

“We have an incredibly strong finance organisation, and I’m looking forward to working with my successor on the transition through the end of the fiscal year.”

Balmer said Microsoft will be naming a new CFO from its finance leadership team in the next several weeks.

“It has been a pleasure to work with Peter as CFO,” Ballmer said.

“He’s been a key member of my leadership team and a strategic advisor to me, and I wish him the very best.”

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