The daily business briefing: July 20, 2016

1. Microsoft beats expectations as cloud business eases sales decline

Microsoft shares rose by four percent in after-market trading on Tuesday after the software giant posted quarterly earnings that beat Wall Street's expectations, despite the company's first drop in annual revenue since 2009 due to the slowing of traditional sales as customers shift to cloud computing. Microsoft annual sales dropped by 8.8 percent, but revenue from Office 365 subscriptions rose 54 percent with commercial customers, and 19 percent from consumers, indicating strong cloud computing growth.

The New York Times MarketWatch

2. Ailes reportedly negotiating exit from Fox News

Roger Ailes is negotiating his exit as head of Fox News as he faces a sexual harassment lawsuit filed by ex-Fox News host Gretchen Carlson, one of Ailes' lawyers told The New York Times on Tuesday. The news came a day after New York magazine reported that the leaders of Fox News parent 21st Century Fox — Rupert Murdoch and his sons, James and Lachlan — had decided to push out Ailes. Matt Drudge reported Tuesday that Ailes had been fired, but 21st Century Fox denied it.

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The New York Times

3. VW stock surges on signs of rebound from emissions-cheating scandal

Volkswagen shares surged by seven percent on Tuesday after the German automaker reported first-half earnings that exceeded market expectations. The stock jump was VW's biggest in three months, and signaled progress in the company's efforts to bounce back from its diesel-emissions cheating scandal. The report came as the attorneys general of New York, Maryland, and Massachusetts accused VW in lawsuits of systematic cheating on diesel emissions tests that started years earlier than previously thought, with the awareness of "top brass."

Bloomberg

4. American producers face China backlash over South China Sea dispute

Chinese nationalists have called for boycotts at KFC outlets and smashed iPhones to protest what the Chinese government has called U.S. meddling in disputes over the South China Sea. Beijing has accused Washington of encouraging the Philippines to challenge China's claims to disputed waters in the region. The backlash came after a United Nations tribunal last week sided with Manila and ruled that China had no basis for its claims over most of the South China Sea.

The Associated Press

5. Delayed Pokemon Go launch in Japan hits Nintendo's stock

Nintendo shares fell by 12 percent in Tokyo on Wednesday due to reports of a delay in the launch of the company's Pokemon Go game in Japan. The app had been scheduled to make its debut in the country on Wednesday, but leaked internal communications from McDonald's Japan, the game's sponsor, said there were concerns that the wildly popular game would overload servers in Japan, where Pokemon's fan base is huge. McDonald's shares jumped by 10 percent in Japan on Tuesday on news the fast-food chain's restaurants would be important locations for Pokemon hunters playing the game.

MarketWatch