Despite a Beat, Shares Sag — Microsoft Earnings

  • Despite a Beat, Shares Sag — Microsoft Earnings

Despite a Beat, Shares Sag — Microsoft Earnings

Microsoft (MSFT) this afternoon reportedfiscal Q3 revenue and profit that comfortably surpassed expectations, although its shares sagged in late trading.

Aside from Surface's recovery, and a healthy 37 percent revenue boost for LinkedIn, there weren't many surprises for Microsoft this quarter. In this division, Windows OEM revenue increased 4% and Windows commercial products and cloud services reported an increase in revenue of 21%.

"Microsoft on the heels of Azure is gaining further steam in this massive secular cloud shift, and the results speak to that", said Daniel Ives at research firm GBH Insights. Operating income grew by 23% (20% CC) to $8.3 billion, and net income grew by 35% (31% CC) to $7.4 billion. "We are innovating across key growth categories of infrastructure, AI (artificial intelligence), productivity, and business applications to deliver differentiated value to customers".

“With consistent investment and strong sales execution, this quarter we achieved better than expected performance across all segments, ” said Amy Hood, executive vice president and chief financial officer at Microsoft.

Office 365 now has 30.6 million consumer subscribers and on the commercial side of the coin, the company has 135 million subscribers.

Intelligent Cloud hit $7.9B (+15%). For the full fiscal year ending in June 2018, EPS is forecast at $3.65 on revenues of $107.29 billion.

Microsoft is up 8.59% on the year.

Other quarterly highlights: revenue in its "More Personal Computing" division, which includes Surface and Xbox, is up 13 percent, while "Productivity and Business Processes", where Office and LinkedIn live, has grown by 17 percent. While this may seem like no growth, this is likely a good thing as the previous quarter was a holiday season which means there was not a dramatic post-holiday decline in active users.

Microsoft shares are down $2.26, or 2.16%, at $92.00, in after-hours trading.

Microsoft stock is up 10 percent since the beginning of 2018.