Microsoft Earnings Exceeded Market Expectations

In the second quarter (Oct.-Dec. 2019) earnings announced by Microsoft  on the 29th, earnings exceeded market expectations. Azure, a cloud service that competes with Amazon.com, continued to grow.

After-hours trading hit a record high.

Second quarter sales were $ 36.9 billion. Earnings per share were $ 1.51. Analysts forecast by Refinitive reported sales of $ 35.7 billion and earnings per share of $ 1.32.

Strong sales in the cloud division and an increase in sales of Windows due to a change in the generation of basic software (OS) for personal computers boosted sales.

According to Patrick Moorehead of Moore Insights and Strategy, Microsoft has focused on legacy business units to encourage the switch to cloud services, as well as retail, manufacturing, healthcare, finance and government agencies. He pointed out that the sales and publicity activities were strengthened and that it was successful.

Azur sales growth was 62%, down from 76% a year ago. However, it exceeded 59% in the first quarter.

Amy Hood, chief financial officer, explained that the expansion of Azur’s service users has boosted sales.

Commercial Cloud, which combines businesses such as Azure and cloud-based software, saw sales rise from $ 9 billion in the year-ago quarter to $ 12.5 billion.

The segment’s gross profit margin, which is a measure of the profitability of the cloud business, was 67%, up from 62% a year earlier.

Sales of Intelligent Cloud, including Azure, increased 27% to $ 11.9 billion. Market expectations were $ 11.4 billion. The median expected range of sales for the segment in the third quarter was $ 11.9 billion. Analysts estimate $ 11.4 billion.

Sales in the Productivity and Business Processes segment, including the business-specific SNS LinkedIn, were $ 11.8 billion, exceeding the expected $ 11.4 billion.

Sales, including Windows, were $ 13.2 billion. The forecast is $ 12.8 billion. In the past year, Windows sales have been affected by a shortage of PC semiconductors from Intel, but last week Intel revealed that most of its supply issues to manufacturers had been resolved. .

The segment expects sales in the third quarter to be $ 10.75 billion to $ 11.15 billion. He explained that the forecast range was broadened than before because uncertainty about the outlook was growing due to the spread of the new coronavirus infection in China.

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Microsoft's Earnings Exceeded Market Expectations - /10

Summary

In the second quarter (Oct.-Dec. 2019) earnings announced by Microsoft  on the 29th, earnings exceeded market expectations. Azure, a cloud service that competes with Amazon.com, continued to grow.

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