Microsoft has said channel inventory levels of certain Windows products have returned to "more normal levels" in its Q3, as its overall sales shot up six per cent annually.
For the three months to 31 March, net income at Microsoft slumped 12 per cent year on year to $5bn (£3.31bn) on sales which over the same period rose six per cent to $21.7bn.
Microsoft said foreign exchange issues had a "significant" impact in Q3 and on a constant currency basis, its sales figure grew nine per cent annually. The results include $190m in expenses relating to its staff-axing spree and the integration of Nokia.
Microsoft's chief financial officer Amy Hood admitted that last quarter, channel inventory of non-Pro Windows products was piling up but said that in Q3, things returned to normal, resulting in a 26 per cent slump in Windows OEM non-Pro products.
"Last quarter, inventory in the channel was higher than normal," Hood said on a call transcribed by Seeking Alpha. "This quarter, activations grew and we exited Q3 with channel inventories at more normal levels. This channel inventory reduction was the main driver of our Windows non-Pro revenue decline."
In Q3, Microsoft's Commercial revenue was up five per cent (seven per cent in constant currency) to $12.8bn, thanks partly to a cloud boost. Commercial cloud revenue rocketed a massive 106 per cent annually, driven by Office 365, Azure and Dynamics.
Microsoft's chief executive Satya Nadella said: "Customers continue to choose Microsoft to transform their business and as a result we saw incredible growth across our cloud services this quarter."
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