Microsoft just reported earningsfor the quarter ended March 31, and while it was more or less in line with expectations, the stock dropped more than 5% after hours.
Basically, revenue growth has slowed to a crawl, and investors are not impressed. The company also issued poor guidance for the next quarter and had to make a tax adjustment that hurt earnings.
Here's how the quarter stacked up against Wall Street's expectations:
  • EPS: $0.62 (non-GAAP) vs $0.64 expected. GAAP EPS was $0.47. 
  • Revenue: $22.1 billion  (non-GAAP) vs $22.09 billion expected. GAAP revenue was $20.5 billion.
On the earnings call, the company issued revenue guidance for the next quarter of $21.7 billion to $22.4 billion, below analyst expectations of $23.1 billion. That sent the stock further down after hours. It's now down more than 5% from market close.
Earnings this quarter were affected by a tax adjustment to account for a higher-than-expected annual tax rate, due to a changing geographic mix in Microsoft's sales. Without that adjustment, EPS would have been 4 cents higher, beating expectations, according to investor relations chief Chris Suh.
The difference between GAAP and non-GAAP comes down to $1.5 billion in deferred revenue from Windows 10 sales. Microsoft has often moved revenue gained from sales during the current quarter into future quarters to cover unanticipated costs such as support. 
None of Microsoft's three product lines showed great growth from last year. The segment containing Azure and Windows Server (Intelligent Cloud) did the best, up 3% at $6.1 billion. The segments containing Windows 10 (More Personal Computing) and Office (Productivity & Business Services) were up only 1% each. 
Strangely, Microsoft noted one reason for the drop in More Personal Computing was a 26% decrease in patent licensing revenue, as the Android market shifts to lower cost phones from manufacturers that Microsoft has no agreements with. Microsoft licenses patents to big Android handset makers like Samsung, and at one point was reportedly booking more than $2 billion a year from this business.
Microsoft also told us that cloud revenue had reached a $10 billion "run rate" this quarter — that is, if you took the amount it's earning from cloud services like Azure and Office 365 and extrapolated it out a year, it would generate $10 billion. Azure in particular continues its standout growth, up 120% from last year if measured in constant currency, Microsoft said.
This was the third quarter of Microsoft's 2016 fiscal year, or Q3 Fy2016 in Microsoft-speak.