Microsoft Corp.’s stock dropped in after-hours trading Wednesday shortly after the software giant poste fiscal second-quarter results that fell just short of analysts’ expectations on revenue.

The revenue miss was blamed on computer chip supply issues with partners such as Intel Corp. and others that meant Microsoft’s biggest business, its personal computing division, came up just short.

For the second quarter, Microsoft reported earnings before certain costs such as stock compensation of $1.10 per share on revenue of $32.47 billion, up 12 percent from a year ago. But Wall Street wanted slightly more on the revenue front, with projected earnings of $1.09 per share on revenue of $32.51 billion.

The miss ensured that Microsoft’s stock saw its pre-earnings gains wiped out in the after-hours trading session, falling by more than 3 percent.

The investors’ reaction took the sheen off what was an otherwise strong quarter by the company, which saw its Productivity and Business Processes division reel in revenue of $10.1 billion in the quarter, up 13 percent from a year ago and just ahead of $10.09 billion analyst estimate.

Meanwhile, the all-important Intelligent Cloud unit, which includes cloud services such as Azure, Dynamics 365 and Office 365, pulled in revenue of $9.4 billion, up 20 percent from the year-ago period. Analysts were expecting $9.28 billion.

Microsoft had positive news regarding Officer 365 consumer subscribers, which grew to 33.3 million customers, up from 32.5 million in the previous quarter.

“Our strong commercial cloud results reflect our deep and growing partnerships with leading companies in every industry including retail, financial services, and healthcare,” Chief Executive Satya Nadella (pictured) said in a statement.

As expected, Microsoft declined to provide exact revenue figures for Azure, though it did say the unit grew by 76 percent from a one year ago. Brent Bracelin, an analyst at KeyBanc Capital Markets, told CNBC that he estimated Azure’s revenues at $2.85 billion for the quarter. That compares with the $7.3 billion in revenue the market expects Microsoft’s rival Amazon Web Services Inc. to report Thursday.

Another key cloud rival, Alibaba Group Holding Ltd., today reported cloud revenue of $962 million for the quarter, which accounted for 6 percent of its total $17.05 billion revenue.

Microsoft’s cloud growth shows that the company is becoming a “dominant player” in the industry both in terms of compute power through Azure, and application delivery through Office 365, said Ryan Duguid, chief evangelist at workflow automation and intelligent process automation company Nintex Global Ltd.

“More importantly, [Microsoft] has evolved to a more open model, meaning that its future success isn’t dependent on the device you use but on the fact that the tools you use every day are delivered by Microsoft, or running in one of its data centers,” Duguid said.

Microsoft’s cloud success helped minimize the impact of the poor performance of its More Personal Computing division, which grabbed revenue of $13 billion in the quarter, below the $13.07 billion Wall Street was hoping for and down 5 percent from a year ago.

On a conference call with analysts, Microsoft Chief Financial Officer Amy Hood blamed the miss on supply problems with its PC partners, and warned that those issues could extend through to the next quarter. She said the company expects “continued market impact” due to the limited supply of chips, and that this could also hit Office 365 consumer revenue growth.

Analyst Holger Mueller of Constellation Research Inc. said Microsoft was trying to make up for shrinking PC sales and Windows royalty payments with new services and products, including new Surface devices, and that the strategy was working well so far.

“Enterprises are looking at Microsoft for new innovation in 2019 and the vendor will have to deliver,” Mueller said. “Next stop might be the Mobile World Congress with a new version of the HoloLens.”

Surface revenue was indeed a bright spot in the quarter, rising to $1.86 billion, up 39 percent from a year ago. No doubt Microsoft benefited from the launch of several new Surface products late last year, including the Surface Go, Surface Laptop 2 and Surface Pro 6. Surface remains a small part of Microsoft’s business, but it’s also growing faster than most.

Mark Sami, vice president of Microsoft and Cloud Solutions at digital transformation agency SPR, said investors were likely overreacting to the revenue miss.

“Many Microsoft users will have to upgrade their Windows 7 environments that will be out of support after this year,” Sami said. “This is going to drive a lot of revenue to this sector of the business as well as potentially boost the productivity cloud numbers because of the new way licenses are packaged.”

Analyst Patrick Moorhead of Moor Insights & Strategy was equally optimistic about the impact of Microsoft’s Surface sales, as well as the continued growth of its cloud business.

“I was pleased with Microsoft’s performance as it racked up growth in key future areas,” he said, citing Azure, Dynamics 365 and Surface. “These areas are key to the company’s future. It’s apparent to me that many customers are going all-in on Microsoft to help enterprises on their digital transformation journeys. It also appears that Surface is more strategic than many knew.”

Microsoft also posted guidance for its fiscal third quarter that was more or less in line with expectations. It forecast revenue of between $29.4 billion and $30.1 billion for the next quarter, compared with Wall Street’s estimate of $29.87 billion.

Photo: Microsoft