(Jan 29): Microsoft Corp reported quarterly revenue and profit that beat analysts' expectations, driven by aggressive cost cutting and growing demand for its cloud products and services.

Microsoft, under Chief Executive Satya Nadella, has been focussing on cloud services and mobile applications as growth slows in its traditional software business. The cloud, in which growing numbers of companies move much of their information technology off premises, proved a bright spot for the Redmond, Wash.-based software giant.

Up to Thursday's close of US$52.05 ($74.30), Microsoft's stock had climbed more than 26% in the past 12 months as investors showed their confidence in Nadella's growth strategy.

The shares rose 5.3% in after-hours trading.

Revenue from the company's increasingly important "Intelligent Cloud" business, which includes products such as servers and platforms such as Azure cloud infrastructure and services, rose 5% to US$6.3 billion.

The company's combined cloud business was on track for US$9.4 billion in annual revenue, the company said, up 15% from the US$8.2 billion revenue it estimated last quarter.

"They nailed the cloud," said Matt Howard, a venture capitalist at Norwest Ventures who monitors Microsoft closely.

Total revenue, however, fell 10.1% to US$23.80 billion, squeezed by a strong dollar as well as a weak personal computer market that has reduced demand for Microsoft's Windows operating system. On an adjusted basis, revenue fell to US$25.69 billion but beat analysts' estimates.

Revenue in the business that includes Windows fell 5% to US$12.7 billion.

Windows revenue closely tracks sales of personal computers, which fell 10.6 percent globally in the December quarter from a year earlier, according to research firm IDC.

IDC said business should improve later this year as companies that had delayed replacing machines before upgrading to Windows 10 make the switch. Windows 10 was released last year.

Microsoft generates more than half of its revenue from outside the United States, so is susceptible to big shifts in exchange rates.

The average value of the dollar, as measured against a basket of major currencies, was 11.7% higher in the last quarter of 2015 compared with the same quarter of 2014.

The company's net income fell to US$5 billion, or 62 cents per share, in its second-quarter ended Dec. 31 from US$5.86 billion, or 71 cents per share, a year earlier.

Excluding items, the company earned 78 cents per share.

Analysts on average had expected a profit of 71 cents per share and revenue of US$25.26 billion, according to Thomson Reuters I/B/E/S.