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Strong Microsoft Earnings Call Marred by Technical Glitch

Microsoft experienced a lengthy technical glitch during CEO Satya Nadella's comments to financial analysts in the quarterly investor call on Tuesday.

A seven-minute, 40-second stretch of dead air started for at least some users watching the session on Microsoft Teams a little over three minutes into the call. Partway into the outage, Microsoft posted a message from its production studios reading, "We are experiencing technical difficulties. Please standby."

[Click on image for larger view.] A message posted during a nearly eight-minute audio outage during the Microsoft second quarter earnings call.

Ironically, as audio came back on around the 11:17 mark, Nadella was highlighting the Teams platform: "...Team's calling globally to 42,000 employees in just four weeks." According to a transcript that Microsoft rushed out faster than usual due to the downtime, Nadella had been talking about Lumen, formerly CenturyLink, undertaking a global rollout of Teams.

The outage came during more widespread Internet problems. Outages across the East Coast on Tuesday morning affected Verizon, Google, Zoom, YouTube, Slack and Amazon Web Services, according to media reports. It was not immediately clear what caused the problem for Microsoft Tuesday evening.

The glitch marred an otherwise very positive quarterly call on an earnings report that saw Microsoft's stock price get a lift in after-hours trading.

Microsoft reported revenues of $43.1 billion and earnings per share of $2.03, for the three-month period ending Dec. 31, 2020. Compared to the year-ago period, that represented a 17% increase in revenues, and both revenues and earnings beat analyst expectations.

"It was a record quarter, driven by our commercial cloud, which surpassed $16 billion in revenue, up 34 percent year over year," Nadella said. "What we are witnessing is the dawn of a second wave of digital transformation sweeping every company and every industry."

Highlights among business-oriented products included a 50% quarter-over-quarter increase in Azure revenues, a 21% increase in Office 365 commercial revenues, 39% growth in Dynamics 365 revenue and a 1% gain in Windows OEM revenues -- a figure that doesn't sound impressive except the comparison was against the frenzy a year ago to replace Windows 7 before the support deadline.

Posted by Scott Bekker on January 26, 2021