Microsoft Earnings: Despite a Beat, Shares Sag

Javier Stokes
April 27, 2018

And they got them: Microsoft's cloud businesses posted huge growth for the quarter. Meanwhile, server products and cloud services revenue as part of Microsoft's Intelligen Cloud business surged 20 percent. (See Cloud Growth Propels Microsoft to Revenue Gains).

According to the announcement from Microsoft, Xbox monthly gamers have also increased 13-percent.

Microsoft shares, which are up nearly 40 percent over the past year, rose slightly after closing 2.1 percent higher at $94.26.

Revenue for Microsoft's More Personal Computing unit rose 13 percent to $9.9 billion, including a 32 percent increase for its Surface business. "Apple is still playing catch up to that".

For the quarter ending March 31, 2018 the tech ringer from Redmond saw its revenue increase to $26.8 billion (up 16%), with operating income up 23% to $8.3 billion. The net profit leaped 35 percent to Dollars 7.4 billion, with diluted earnings per share up 36 percent to USD 0.95.

Earnings per share of $0.95 were up 36 per cent from the year-ago quarter and ahead of the $0.85 estimate given by analysts. Overall, LinkedIn revenue grew by 37% (33% CC).

Source Canalys
Source Canalys

The company reported $3.5 billion in capital expenditures, its highest level yet and up 66 percent year over year.

"Dynamics products and Cloud services revenue increased 17 per cent, driven by Dynamics 365 revenue growth of 65 per cent", the company said.

The company provided no guidance but said it would do so on the conference call.

"We think folding Windows into the new Experiences and Devices division, which is led by a former Office executive, sends a strong signal of the supporting, and not leading, role Windows will likely take in coming years, and we like the continued emphasis on hybrid cloud and [artificial intelligence]", Stifel analysts led by Brad Reback wrote in a Sunday note.

Office commercial products and cloud services revenue grew by 14% (12% CC), and Office 365 commercial revenue grew by 42% (40% CC).

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But the company said it was "currently considering its options", and said it will make a further announcement "in due course". Roberts said the Sky board's withdrawal of its support for Fox's offer was "the ideal step as far as we are concerned today".

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