Microsoft *Official* (NASDAQ: MSFT)

Perisher

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This software giant needs no introduction, it's a definite "buy and hold" kind of stock. Sleep well at night.

Microsoft books biggest revenue growth since 2018​


KEY POINTS
  • Microsoft exceeded analysts’ estimates on the top and bottom lines, as well as revenue guidance.
  • Windows revenue growth from device makers was higher than the company had predicted.
  • Azure cloud revenue growth was flat from the prior quarter.
Microsoft shares moved 3% lower in extended trading Tuesday after the software maker announced fiscal third-quarter earnings and quarterly revenue guidance that came in stronger than analysts had expected. The company’s operating margin narrowed somewhat as cloud became a larger part of its business.

Here’s how the company did:

  • Earnings: $1.95 per share, adjusted, vs. $1.78 per share as expected by analysts, according to Refinitiv.
  • Revenue: $41.71 billion, vs. $41.03 billion as expected by analysts, according to Refinitiv.



The software and hardware maker posted 19% annualized revenue growth for the quarter, which ended March 31, according to a statement. That’s the biggest quarterly increase the company has posted since 2018, thanks in part to gains in PC sales resulting from coronavirus-driven shortages last year.

The company said its Azure public cloud, which competes with market leader Amazon Web Services, grew 50%, faster than the 46% growth analysts had expected, according to a CNBC review of 14 equity research notes. In the prior quarter Azure revenue grew 50%. Microsoft does not disclose Azure revenue in dollars.

With respect to guidance, Microsoft is expecting $43.6 billion to $44.5 billion in revenue in the fiscal fourth quarter, said Amy Hood, Microsoft’s finance chief, on a conference call with analysts. At the middle of the range that would represent 16% growth, more than the $42.98 billion consensus estimate among analysts polled by Refinitiv.

the fiscal third quarter. That was up 23% year over year and above the FactSet consensus estimate of $14.92 billion. Intelligent Cloud contains Azure, Windows Server, SQL Server, Visual Studio, GitHub and Enterprise Services.

The Productivity and Business Processes segment, containing Office, Dynamics and LinkedIn, contributed $13.55 billion in revenue, up 15% and more than the $13.49 billion FactSet consensus. The Teams chat and calling app reached 145 million daily active users, up from 115 million in October, while LinkedIn’s advertising business reached $3 billion in revenue over the past 12 months, Microsoft CEO Satya Nadella said on the call.




The company’s More Personal Computing unit, which includes Windows, gaming, devices and search, came up with $13.04 billion in revenue. That was up almost 19% and higher than the $12.55 billion consensus. Technology research company Gartner estimated earlier this month that PC manufacturers shipped nearly 70 million units in the quarter, 32% more than in the year-ago quarter, the fastest growth since Gartner started tracking the PC market in 2000.

That benefits Microsoft’s sales of Windows licenses to PC makers, which were up 10%. There are now over 1.3 billion monthly active devices running the Windows 10 operating system, Nadella said.

The outcome was greater than Microsoft itself had forecast. In January, Hood called for Windows license revenue from device makers to be up in the low single digits.

The PC market endured “significant ongoing constraints in the supply chain,” Hood said on Tuesday.

At the same time, the gross margin for Microsoft’s broad Commercial Cloud category of products — including Azure, commercial subscriptions to the Office 365 productivity bundle, cloud-based Dynamics 365 enterprise applications and commercial parts of LinkedIn — narrowed to 70% from 71%. The number is important to investors who want to see that Microsoft can continue to make Azure more profitable.

The operating margin for the Intelligent Cloud segment that includes Azure also narrowed to 42.5% from about 44.5%. Microsoft’s overall operating margin came in at 40.9%, down from 41.6%.

Microsoft said in the quarter it had won a U.S. Army contract worth up to $21.9 billion over a decade for augmented reality headsets based on its latest HoloLens device. The company also issued patches to address vulnerabilities in its Exchange Server on-premises email and calendar software that Chinese hackers exploited. It also closed the $8.1 billion acquisition of video game maker ZeniMax Media.

Notwithstanding the after-hours move, Microsoft shares are up 18% year to date, compared with a gain of around 12% for the S&P 500 over the same time period.

 

Perisher

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YTD $217 to current price $254.
Bought some on the dip post earnings release yesterday.
 

Perisher

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I sold at 254 1 month back. If drop below 250 will buy back.
I thought i can do that last time... then it chiong one time... suffice to say i won't trade much.
But if you are good at it, then ya.
 

ingen

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Holding since $103. Also took the chance to add at $250 during this week's dip.

ARK apparently treats MSFT shares as equivalent to a cash deposit lol.
 

wutawa

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My 1st us share, bought at $111.50, then itchy finger sold. Bought again $183~$241.55. Small holding nia
 

abutan

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What do u think of the current price earnings of 35 times? It’s all time high
 

wutawa

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What do u think of the current price earnings of 35 times? It’s all time high
i am fine with that. only the 153 pe of dynatrace and -ve pe of nio worry me a bit.
 

yuzu28

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Wonder how high can this go? I'm holding very small amount @ 200.
 

yuzu28

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Sorry noob question...
I just received a letter from SCB on corporate announcement for MSFT. is it actually scrip dividend, like what those ocbc / dbs offered?

It says, tender offer price usd 280 per share.
Options - take cash or take no action.
 

marxace

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Sorry noob question...
I just received a letter from SCB on corporate announcement for MSFT. is it actually scrip dividend, like what those ocbc / dbs offered?

It says, tender offer price usd 280 per share.
Options - take cash or take no action.
Scb always sends such silly letters that I think have nothing to do with the company. It's like a third party company wanting to offer cash for your stocks at this price. Not sure if it's the same letter as yours though..
 

yuzu28

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Scb always sends such silly letters that I think have nothing to do with the company. It's like a third party company wanting to offer cash for your stocks at this price. Not sure if it's the same letter as yours though..
I see... Thanks! This is my first time receiving it cos I am on SCB less than a year.
 

wutawa

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Fyi, the buying company may not proceed even though u agree to sell. This is the 1st time i receive such letter so i decided to give it a try.
 

marxace

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I seem to recall reading somewhere about this being very disadvantageous to the retail investors accepting the offer.

Somewhere along the lines whereby when u accept the offer but they do not pay you immediately and they drag on and on until the market price goes higher then they buy from you but meanwhile if you accept the offer, you are stuck waiting for their payment to you while seeing your stocks rise without receiving payment.

If the market price tanks, they just retract their offer to you..

I may be wrong on the above though but I am sure I read about this "scam" somewhere though.
 
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