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Microsoft CEO Satya Nadella talks to USA TODAY’s Marco Della Cava about his three years at the helm of the iconic tech company.
Robert Hanashiro, USA TODAY

SAN FRANCISCO — Microsoft’s hardware struggles are again denting earnings. First it was smartphones, and this time it’s the much-trumpeted Surface computer line.

Profits at the Redmond, Wash. computer giant jumped 28% to $4.8 billion in its fiscal third quarter. Sales also surged, gaining 8% to $22 billion.

Those gains are largely thanks to Microsoft’s cloud-computing division. Not helping: hardware. Personal computing sales fell 7% to $8.8 billion, dogged by a 26% drop in Surface sales.

Surface tablets are the company’s main achievement in the hardware space, after Microsoft got out of the smartphone market in the wake of its failed investment in Nokia. Although its HoloLens augmented reality headset represents a strong entry in what could be a new age of computing, that bet is still a long way from paying off.

In contrast, sales in its cloud business jumped 11% to $6.7 billion on the back of a 93% surge in Azure revenue.

The company reported third-quarter adjusted earnings per share Thursday of 73 cents on adjusted revenue of $23.6 billion. Those numbers beat analyst EPS expectations of 70 cents, and met revenue estimates of $23.6 billion, according to S&P Global Market Intelligence.

Microsoft’s otherwise buoyant stock drop around 3% in after-hours trading, after closing up 0.6% at an all-time high of $68.24.

The Redmond, Wash-based company has been moving aggressively to establish itself as a preeminent choice for enterprise customers. Microsoft recently rolled Microsoft Teams, its take on enterprise communication tool Slack.

And last month, the company took advantage of its massive outlay for LinkedIn and unveiled a product for sales professionals, Sales Navigator, which now puts it in competition with companies such as Salesforce.

Microsoft said LinkedIn, which it bought last summer for $26 billion, contributed revenue of $975 million in the quarter.

Follow USA TODAY tech reporter Marco della Cava @marcodellacava