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Microsoft NZ / HP NZ results highlight move to cloud services

29 May 2014

Microsoft New Zealand, the local arm of the world’s biggest software maker, lifted sales and profit last year while Hewlett Packard's local unit extended its losses, highlighting increased demand for cloud-based services and weaker sales of personal computers.

Sales at Microsoft NZ rose 2.9 percent to $78.5 million in the 12 months ended June 30, 2013, according to its annual report filed with the Companies Office. Profit rose 10 percent to $8.05 million.

“More and more we are seeing our customers move rapidly, and I’m talking triple digit year-over-year growth consistently, to the cloud,” Frazer Scott, director of marketing and operations at Microsoft NZ, told BusinessDesk.

“It fundamentally changed how our revenue and our marketing and resourcing stacks up as we move into that model.”

Washington-based Microsoft's fastest growing products were public cloud services Office 365 and Azure, and the company's New Zealand arm was mirroring that trend, Scott said, without being specific.

The parent company posted its third-quarter results last month, with per-share earnings beating estimates. The shares have gained 7.4 percent this year, twice the pace of the Standard & Poor's 500 Index, as investors warmed to the company's strategy to drive more revenue to cloud-based services. Sales of Office 365 and Azure doubled in the quarter.

Microsoft NZ paid a dividend of $7.32 million to its parent, up 45 percent from the year earlier, its accounts show.

Growth in cloud-based software hasn't translated to a pick up in personal computer sales. Hewlett-Packard New Zealand, the local arm of the global PC, notebook, printer and accessories company, has reported its fourth consecutive year of losses.

HP New Zealand narrowed its loss to $14.7 million in the year ended Oct. 31, from a loss of $92.5 million a year earlier, according to its annual report. Sales fell 14 percent to $555.5 million. The local unit didn't declare any dividend payment to its parent.

The Silicon Valley-based parent has posted declining sales for 11 consecutive quarters as the IT company struggles with falling personal computer and printer sales as across the globe consumers shift towards smaller devices like smartphones and tablets.

Earlier this month HP announced it would be cutting a further 16,000 jobs, adding to its already flagged 34,000 job losses.

"In order to win in the rapidly-evolving markets where we compete, we have to continue to make HP a more nimble, lower cost, and more customer and partner-centric company," a spokesperson for HP wrote in an email.

"We have not stated specific locations or businesses that would be impacted."

HP doesn't comment on the local unit's earnings, the spokesperson said.

By Suze Metherell - BusinessDesk

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