Shares of Microsoft [NASDAQ:MSFT] surged 10.08% on Friday, after the company announced its first-quarter 2016 fiscal year, ended September 2015, non-GAAP revenues of $21.66 billion, down 12.2% from $23.2 billion the same quarter last year, and non-GAAP earnings of $0.67 per diluted share, compared with $0.65 per diluted share in the first-quarter of its 2015 fiscal year.
The non-GAAP EPS, which was up 3.08% year-on-year, was based upon 8,066 million shares outstanding, a reduction of 3.41% from 8,351 million shares outstanding during the same period last year. Without the 285 million share reduction, the non-GAAP EPS could have been flat year-over-year. Microsoft said it returned $6.9 billion to shareholders in the form of share repurchases and dividends. Analysts’ expectations were for $0.58 per share on revenues of $21.23 billion.
The quarter appears to be an improvement compared to the last quarter, when Microsoft stunned investors with a massive loss of $2.1 billion due to a $7.6 billion write-down for its Nokia purchase. In the first-quarter 2016 earnings release, Microsoft changed the way they report revenues from its business segments as the Devices and Consumer group is now called “More Personal Computing”. The Cloud business and Business Solutions became “Intelligent Cloud” and “Productivity and Business Processes”, respectively.
The company said that its More Personal Computing revenue declined 17% to $9.4 billion in the first-quarter. Windows OEMs declined 6% despite the Windows 10 launch. Microsoft's smartphone business declined 54% year-over-year. Microsoft didn’t disclose its Xbox revenue in the quarter, but it said Xbox Live monthly active users grew 28% to 39 million.
Search advertising revenue, excluding traffic acquisition costs, grew 29%. Microsoft said U.S. market share of Bing benefited from Windows 10 usage, but didn’t disclose any figures to back up the claim. Windows 10 is now running on 110 million devices and has 6.63% of the desktop operating systems market, according to NetMarketShare. Windows 7 and XP still have sizable market shares of 56.53% and 12.21%, respectively.