Seeking Alpha

Microsoft offers conservative outlook; unearned revenue +13%

  • Microsoft (NASDAQ:MSFT) guides on its FQ4 CC for FQ1 revenue of $21.2B-$22.3B, below a $23.1B consensus. But the company has shown a habit of guiding conservatively in recent quarters.
  • Also likely playing a role: The Nokia phone unit (about to see massive job cuts) is expected to see FQ1 revenue of $1.9B-$2.3B; that's down from a year-ago level of $3.9B. 5.8M Lumia phones were sold in FQ4 during the 2 months following the closing of the Nokia deal, with low-end phones making up "a majority" of the volume; 7.4M Lumias were sold over the unit's full June quarter last year.
  • Microsoft's unearned revenue balance rose 13% Y/Y to $25.2B. Its contracted not billed balance totaled $24B (up $3B Y/Y), and total bookings rose 29% (20% exc. Nokia).
  • Other  details: 1) Office commercial revenue (inc. Office 365) grew 4%. 2) Surface revenue totaled $409M, and 1.1M Xboxes were sold. 3) The benefit to Windows business revenue that came from the end of XP support "moderated" towards the end of FQ4. 4) $1.3B was spent on capex in FQ4, and $5.5B overall in FY14. 5) "Commercial licensing" accounted for 65% of FQ4 gross profit.
  • MSFT +1.3% AH. Earnings slides (.ppt), guidance (.ppt).
  • Prior Microsoft earnings coverage

Check out Seeking Alpha’s new Earnings Center »

This was corrected on 07/22/2014 at 07:30 PM.
Comments (9)
  • aviator189
    , contributor
    Comments (2) | Send Message
     
    Um...I thinks you need to make a huge correction...

     

    Here -> where you said "5.8M Lumia phones were sold in FQ4, down from 7.4M a year ago...". ----

     

    That statement is incorrect. The 5.8M sold accounts for a 26% shorter window of time than was allotted to the 7.4M sold. This is due to the timeframe in which the Nokia acquisition took place. So, once you figure that in, you can estimate that the adjusted amount would have come to about 7.9-8.0M for this quarter, which is positive growth for the Lumia brand.
    22 Jul 2014, 07:23 PM Reply Like
  • aviator189
    , contributor
    Comments (2) | Send Message
     
    Um...I think you need to make a huge correction...

     

    Here -> where you said "5.8M Lumia phones were sold in FQ4, down from 7.4M a year ago...". ---- That statement is incorrect.
    The 5.8M sold accounts for a 26% shorter window of time than was allotted to the 7.4M sold. This is due to the timeframe in which the Nokia acquisition took place. So, once you figure that in, you can estimate that the adjusted amount would have come to about 7.9-8.0M for this quarter, which is positive growth for the Lumia brand.
    22 Jul 2014, 07:24 PM Reply Like
  • toraji
    , contributor
    Comments (816) | Send Message
     
    Right on aviator,

     

    I always see this everywhere and I do not understand why? Why do authors always cherry pick the bad things above the good things and when they do they are almost always wrong

     

    Regards
    t
    22 Jul 2014, 08:12 PM Reply Like
  • Transcripts&10-K's
    , contributor
    Comments (872) | Send Message
     
    Not too surprised it wouldn't get mentioned, but search advertising revenue grew 40% in the quarter, after growing 38% in the prior quarter and 34% in fiscal Q2; the U.S. search share for Bing grew to 19.2% in June, up 40 basis points from May.
    22 Jul 2014, 08:51 PM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (952) | Send Message
     
    The 40% search ad growth was mentioned in the prior post...along with the 11% display ad decline:

     

    http://seekingalpha.co...
    22 Jul 2014, 10:14 PM Reply Like
  • Transcripts&10-K's
    , contributor
    Comments (872) | Send Message
     
    Thanks for the clarification Eric. I was referring to the share gains as well (which were pretty sizable against historic results), but realize there's some questions around comScore data at this point; thanks for the reply.
    23 Jul 2014, 09:03 AM Reply Like
  • Transcripts&10-K's
    , contributor
    Comments (872) | Send Message
     
    Another gem on Bing:

     

    "We expect Bing to be profitable on a standalone basis in FY16."
    23 Jul 2014, 10:03 AM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (952) | Send Message
     
    No problem. I think there's some value in comScore's search data, but the fact that it only covers U.S. share leads to an incomplete look at the broader search market.

     

    As a consumer who wants to see healthy search competition, it's nice to see the Bing profit forecast. I'm guessing the online services ops will be affected some by the job cuts.
    23 Jul 2014, 10:47 AM Reply Like
  • boo2252
    , contributor
    Comments (14) | Send Message
     
    I remember a time not so long ago when any company that reported mixed results and guided lower an automatic 3%-6% pull back was in order...Its funny how they ignore those things when a Nasdaq large cap has a not too stellar report. I recall Amazon had a bad report a year or so ago but margins improved some so they ran it up. It's all about propping the markets up and giving the big guns a pass when they miss.
    23 Jul 2014, 07:44 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs