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Fri, Feb. 5, 4:17 PM
- Microsoft (NASDAQ:MSFT) says it has struck a licensing deal with GoPro (NASDAQ:GPRO) related to "certain file storage and other system technologies." Terms are confidential.
- GPRO +4.3% after hours to $10.39, after rising 1.8% in regular trading on an ugly day for markets. The action camera leader sold off yesterday after issuing weak guidance in its Q4 report.
- In recent years, Microsoft has struck licensing deals with Samsung, ZTE, and many other Android OEMs. The shares of the licensees generally haven't risen in response.
Fri, Jan. 29, 1:48 PM
- Microsoft (NASDAQ:MSFT) is just ~$2 removed from a 52-week high of $56.85 (set in December) after beating FQ2 estimates with the help of job cuts, buybacks, Azure/Office 365 growth, and a smaller sales decline for the More Personal Computing (Windows, hardware, Bing) segment. Several firms have hiked their targets.
- The software giant once more guided conservatively on its earnings call, forecasting its three reporting segments will collectively post FQ3 revenue of $21.6B-$22.3B (below a $22.33B consensus). However, Microsoft also cut its FY16 (ends June '16) operating expense guidance to $31.4B-$31.6B from October's $31.9B-$32.1B. FY16 tax rate guidance remains at 19%-21%.
- "Uneven macro, stronger dollar and slumping PC markets aren't enough to derail the positive momentum of the Microsoft Cloud story," writes Morgan Stanley's Keith Weiss ($66 target). He also isn't worried about Azure sales cannibalizing high-margin Server & Tools (on-premise software) revenue, arguing the cloud transition is a net positive for total value creation.
- Piper's Katherine Egbert ($66 target) is pleased Windows OEM revenue fell less than the PC market (5% vs. 8%-10%), and that core enterprise sales rose 6% Y/Y with the help of Azure growth (127% Y/Y in dollars, 140% exc. forex) and upsells for on-premise products such as SQL Server.
- Oppenheimer's Shaul Eyal ($56 target): "MSFT can remain a solid investment vehicle if it continues to show: 1. strong Cloud Services performance (up 140% constant currency YoY); 2. continued operational discipline supporting margin improvement; 3. strong commercial presence via Dynamics and Office 365; 4) clear product road-map supporting further acceleration. MSFT continues to position itself as one of two cloud infrastructure related market leaders."
- Mentioned on the earnings call/slides: 1 Commercial bookings rose 12% Y/Y, with the commercial unearned revenue balance rising 2% to $19.6B. 2) Office 365 consumer subs rose by 2.4M Q/Q to 20.6M, and Microsoft claims Office 2016 adoption is "outperforming Office 2013 over the same period of time." However, with the 365 shift weighing, Office commercial and consumer revenue respectively fell 1% and 14% Y/Y. 3) Server products/cloud services revenue (affected by the Azure shift) rose only 3%, while enterprise services revenue rose a stronger 10%.
- Prior Microsoft coverage, earnings slides (.ppt)
Thu, Jan. 28, 4:52 PM
- Though PC sales remain weak and the division's phone revenue continues plunging (it fell 49% Y/Y in constant currency), Microsoft's (NASDAQ:MSFT) More Personal Computing revenue fell a moderate 5% Y/Y in FQ2 to $12.7B, an improvement from FQ1's 17% drop. Moreover, job cuts helped segment op. profit rise 33% to $2.04B.
- Productivity & Business Process revenue (Office and Dynamics business apps) fell 2% to $6.7B vs. 3% in FQ1, as the transition from up-front Office licenses to Office 365 subscriptions continues weighing. Op. profit fell 8% to $3.31B. Intelligent Cloud revenue (server products, enterprise mobility, and Azure) rose 5% to $6.3B vs. 8% in FQ1; op. profit fell 1% to $2.58B.
- Business details: In constant currency, Office commercial products revenue rose 5% Y/Y with Office 365 commercial rising nearly 70%, Dynamics revenue rose 11%, server product/cloud services revenue rose 10%, Azure revenue rose 140% in CC, Surface revenue 29%, and search ad revenue (exc. traffic acquisition costs) 21%. Windows OEM revenue fell 5%. Xbox Live MAUs rose 30% to 48M.
- Financials: Forex had a 500 bps impact on non-GAAP revenue growth (-2% vs. +3%). Gross margin (pressured a bit by the cloud transition) fell to 58.5% from 61.7% a year ago. Thanks to job cuts, R&D spend was flat at $2.9B, sales/marketing spend fell 8% to $3.96B, and G&A fell 5% to $1.04B.
Also boosting EPS: Common stock repurchases totaled $3.7B. Microsoft ended FQ2 with $102.6B in cash/short-term investments (much of it offshore) and $43.7B in debt. The unearned revenue balance stood at $25B.
- MSFT +4.1% after hours to $54.17. Earnings call at 5:30PM ET (webcast), guidance should be provided.
- Microsoft's FQ2 results, earnings release
Thu, Jan. 28, 4:07 PM
Fri, Jan. 15, 12:35 PM
- On a day the Nasdaq is off 4.1%, companies with strong PC exposure are seeing even bigger losses after Intel (down 9.2%) beat Q4 estimates and provided healthy 2016 sales guidance, but also reported a slowdown in server CPU sales growth and offered cautious earnings call remarks about Chinese demand and macro trends.
- Intel's Client Computing Group (provides PC/mobile CPUs) only saw a 1% Y/Y revenue drop in Q4 in the face of weak PC demand. However, volumes were down 16%, with desktop, notebook, and tablet CPU volumes respectively falling 9%, 10%, and 33%. A 17% increase in ASPs minimized Intel's revenue drop. Earlier this week, IDC and Gartner respectively estimated PC shipments fell 10.6% and 8.3% Y/Y in Q4.
- The list of PC-related names seeing big losses includes Microsoft (MSFT -4.8%), Nvidia (NVDA -6.7%), AMD (AMD -8.1%), HP Inc. (HPQ -5.2%), Micron (MU -8.9%), Seagate (STX -6.4%), and Western Digital (WDC -6.4%). AMD reports on Jan. 19, Microsoft and Western on Jan. 28, and Seagate on Jan. 29.
- In other Microsoft news, the company has carried out price cuts of up to 17% for Azure cloud computing services, following new price cuts from Amazon, and is reportedly looking to acquire Indian mobile ad network owner InMobi. Google was rumored to be in buyout talks with InMobi last year.
- AMD, meanwhile, has begun shipping its Opteron A1100 (Seattle) ARM server CPU. Seattle, first announced in 2013, sports up to eight 64-bit ARM Cortex A-57 CPU cores, and enters a market also targeted by AppliedMicro, Cavium, and Qualcomm.
Thu, Jan. 14, 7:54 PM
- December marked a strong month for new videogames, though the sum was down slightly Y/Y likely due to drag from older-generation consoles.
- New games at retail sold at the pace of $3.22B, NPD Group reports, down from 2014's $3.26B. Hardware and software were down, though accessory sales rose 10%.
- A 4% increase in spending on newest-generation PlayStation 4, Xbox One and Wii U was offset by a 71% drop in PlayStation 3, Xbox 360 and Wii hardware. Overall, hardware sales fell 6% Y/Y. Unsurprisingly, December was the best month on record for software for the newest consoles.
- In U.S. new physical software: December is usually Call of Duty month and this one was no exception, as Call of Duty: Black Ops 3 (ATVI +1.6%) won the period, followed by Star Wars: Battlefront (EA +1.7%) and Fallout 4 (Bethesda Softworks). With holiday gifting, the rest of the chart was full of familiar names: Take-Two's (TTWO +0.6%) Grand Theft Auto V, sports games from EA and Take-Two, and Minecraft (MSFT +2.9%).
- As usual, Sony's (SNE -0.8%) PS4 was the top-selling console. It beat the Xbox One and Wii U (OTCPK:NTDOY -0.7%) in sales in every month except April and October, and it claimed the crown in the two best-selling months of the year (November and December). Sony says it's nearing 36M PS4s sold overall, after 6.4M-plus from this holiday season.
Wed, Jan. 13, 10:29 AM
- Arguing a 3% dividend yield and an expected 10% FY15-FY18 EPS CAGR spells a 13% annual return profile, Morgan Stanley's Keith Weiss has upgraded Microsoft (MSFT +2.2%) to Overweight, and hiked his target by $9 to $66.
- A 7% revenue CAGR is expected from FY16-FY18, fueled by Azure, server/data center products, and Office 365. EPS growth, pressured in recent years by weak PC sales and the cloud transition (has pushed out revenue recognition and led to higher investments), is seen outpacing revenue growth with the help of buybacks, cost controls, and cloud gross margin expansion. Weiss: "Microsoft has a strong public cloud positioning, datacenter share gains, a durable Office franchise, and less risk in Windows bolsters our confidence."
- The upgrade comes ahead of Microsoft's Jan. 28 FQ2 report. Last month, Goldman upgraded to Neutral after more than two years of staying bearish.
- Update (4:26PM ET): With the Nasdaq dropping 3.4% on the day, Microsoft gave back its gains, and then some. Shares closed down 2.2%.
Dec. 17, 2015, 5:13 PM
- Rambus (NASDAQ:RMBS) will work with Microsoft (NASDAQ:MSFT) researchers to explore future memory requirements for quantum computing. Rambus asserts its expertise in "high-bandwidth, power-efficient memory architectures, combined with Microsoft researchers knowledge of advanced system and data center design will be applied to drive new technology platforms."
- Though still potentially many years away from large-scale use, quantum computing remains a subject of fascination in the tech world for its potential to create systems orders of magnitude more powerful than ones relying on transistor-based CPUs, and has seen R&D efforts grow as Moore's Law increasingly shows its age and possibly approaches physical/atomic limits in the next decade.
- Google, NASA, and private D-Wave Systems recently proclaimed D-Wave's 2X quantum computer (costs $10M) was able to run an algorithm 100 million times as fast as a standard CPU. But for now, the number of applications D-Wave's system can be practically applied to remains limited. (more details here)
- Rambus has risen to $12.02 after hours.
Dec. 11, 2015, 2:49 PM
- NPD estimates U.S. physical retail video game sales fell 7% Y/Y in November to $993.9M, after having dropped 3% in seasonally weaker October to $349.4M. Aggressively-priced console bundles likely weighed on standalone game sales. Hardware sales rose 11% to $1.12B after being roughly flat in October, and peripheral/interactive toy sales rose 6% to $357.7M after rising 18% in October.
- Not surprisingly, Activision's (ATVI -3.2%) Call of Duty: Black Ops III was the month's top-selling game, followed by Bethseda's Fallout 4. However, Activision's Destiny: The Taken King fell out of the top-10, after coming in at #7 last month.
- Electronic Arts' (EA +1.2%) Star Wars: Battlefront, which recently saw a $20 GameStop price cut amid mixed critic and user reviews, was #3. EA also took the #4, #6, and #7 spots via Madden NFL 16, FIFA 16, and Need for Speed. Madden and FIFA were also #4 and #6 last month.
- Take-Two's (TTWO -1%) NBA 2K16 dropped three spots to #5, while WWE 2K16 fell out of the top-10. Ubisoft's (OTCPK:UBSFY) Assassin's Creed: Syndicate and Just Dance 2016 were #9 and #10; neither was in the top-10 last month.
- Microsoft's (NASDAQ:MSFT) Halo 5: Guardians fell from #1 to #8. With Halo 5 providing less of a lift to Xbox One sales, the PlayStation 4 (NYSE:SNE) regained its status as the top-selling U.S. retail console.
- EA remains green following the data and news the company is entering the eSports market. Activision (like GameStop) is underperforming amid a 1.8% Nasdaq drop, and Take-Two is down modestly.
- Last month: Black Ops 3 sells $550M in opening weekend
Oct. 23, 2015, 9:16 AM
- While Microsoft (NASDAQ:MSFT) guided to FQ2 revenue of $24.8B-$25.4B vs. Street estimates of $24.8B, the revenue mix has gross margin guidance nearly 200 basis points less than consensus, says analyst Heather Bellini. By her team's count, it means an implied FQ2 EPS range of $0.68-$0.71 vs. the $0.72 consensus.
- For the full-year, Bellini cuts her revenue forecast in higher margin businesses (PBP and IC), though hiking estimates in lower margin units like Xbox and Surface.
- She reiterates a Sell rating, while lifting the price target to $45 from $40.
- Previously: Sell-side a buyer after Microsoft reports (Oct. 23)
- Shares +9.5% to $52.61
Oct. 23, 2015, 9:14 AM
Oct. 23, 2015, 9:07 AM
- Taking note of the earnings beat and inline FQ2 guidance, Credit Suisse analyst Philip Winslow says management's cutting of FY2016 operating expenses guidance to $31.9B-$32.1B (from $32.1B-$32.4B) could prove conservative.
- He boosts his FY16 EPS outlook to $2.88 from $2.72, and his price target to $60 from $55. The stock remains Outperform-rated.
- Also lifting the price target to $60 from $55 is Deutsche Bank, while FBR raises to $60 from $53.
- There's also an upgrade in the mix as BAML lifts MSFT to a Buy from Neutral. The price target is $63.
- Shares +10% to $52.83 in the premarket.
- Previously: Microsoft issues solid FQ2 guidance; shares +8% (Oct. 22)
- Previously: Microsoft beats by $0.08, beats on revenue (Oct. 22)
Oct. 22, 2015, 7:38 PM
- After several quarters of providing light guidance, Microsoft (NASDAQ:MSFT) is singing a different tune today: The software giant has guided on its call for its three reporting segments to collectively post FQ2 revenue of $24.8B-$25.4B, in-line with a $25.1B consensus and likely sparking hopes of upside given Microsoft's history of guiding conservatively.
- Productivity & Business Processes is expected to see revenue of $6.6B-$6.7B, Intelligent Cloud $6.2B-$6.3B, and More Personal Computing $12B-$12.4B. Forex is expected to have a 4% impact on revenue growth, after having a 5% impact in FQ1.
- Though revenue fell 7% Y/Y in FQ1 due to PC weakness and cloud transition (pushes out revenue recognition), cloud subscription billings helped the unearned revenue balance (non-GAAP) rise 3% Y/Y (9% exc. forex) to $23.1B. The contracted but not billed balance was above $23.5B.
- Also: Bing, once a large cash sinkhole, is finally profitable. Search-related revenue topped $1B in FQ1, with search ad revenue (ex-TAC) rising 23% Y/Y. Windows 10/Cortana integration appears to be helping: Nearly 20% of the quarter's search revenue came from Windows 10 devices.
- Other details: 1) Office commercial product/services revenue fell 2% Y/Y thanks to the 365 transition. Office consumer revenue fell 13%. 2) Xbox Live monthly active users rose 28% to 39M. 3) Enterprise mobility management (EMM) software customers more than doubled Y/Y to over 20K. 4) Windows volume license revenue fell 3% Y/Y, and Surface revenue fell 26% to $672M ahead of the Surface Pro 4 launch.
- Microsoft is trading at $51.89 after hours.
- FQ1 results, details, earnings slides (.ppt), guidance (.ppt)
Oct. 22, 2015, 4:48 PM
- Microsoft's (NASDAQ:MSFT) Intelligent Cloud reporting segment (one of the three main segments in Microsoft's new reporting structure, covers server products, Azure, and enterprise services) was easily the company's best-performing segment in FQ1, with revenue rising 8% Y/Y (14% exc. forex) to $5.9B. Segment op. income rose 14% to $2.4B. Azure revenue more than doubled Y/Y.
- Productivity & Business Processes (Office/Office 365 and Dynamics apps) revenue fell 3% Y/Y (+4% exc. forex), with sales pressured by the shift from up-front licenses to cloud subscriptions. Op. income fell 7% Y/Y to $3.1B. Office 365 consumer subs grew by ~3M Q/Q to 18.2M; Dynamics revenue grew 12% in constant currency.
- More Personal Computing (Windows, search, games, hardware) revenue fell 17% Y/Y (13% exc. forex) to $9.4B due to PC weakness and declining phone sales (-54% in constant currency). Op. income fell 4% to $1.6B. With the Windows 10 launch providing a boost, Windows OEM revenue fell 6% Y/Y, an improvement from FQ4's 22%.
- Financials: Lifting EPS: GAAP operating expenses fell 7% Y/Y to $7.3B (job cuts at work) after backing out year-ago one-time charges. Also helping: $4B was spent on buybacks. Gross margin rose 30 bps Y/Y to 64.6%. Microsoft ended FQ1 with $99.4B in cash/short-term investments (much of it offshore), and $37.5B in debt.
- Shares have risen to $51.66 after hours, making new 52-week highs along the way.
- FQ1 results, PR
Oct. 22, 2015, 4:11 PM
- Microsoft (NASDAQ:MSFT): FQ1 EPS of $0.67 beats by $0.08.
- Revenue of $21.7B (-6.5% Y/Y) beats by $670M.
- Shares +4%.
Oct. 14, 2015, 9:15 PM
- Demand is still strong among teens for the newest generation of videogame consoles, Piper Jaffray says -- and that's good news for leading game makers like Activision Blizzard (ATVI +0.4%) and Electronic Arts (EA +3.1%).
- Uptake of the Xbox One (MSFT -0.5%) and PlayStation 4 (SNE -1.5%) consoles "is at the highest level we have seen, reinforcing our expectation for a much more rapid pace than prior-gen" consoles, says analyst Michael Olson, a "clear positive" for Activision, EA, Take-Two Interactive (TTWO +0.2%) and retailer GameStop (GME -1.1%).
- The firm's semiannual survey found 73% of videogame-playing teens own an Xbox One or PlayStation 4, or intend to get one -- up from 70% last spring and 67% last fall. Some 39% currently own one of the newer consoles, up from 37% in the spring and 26% last fall.
- "We believe the combination of next-gen console uptake and a robust lineup of AAA titles will lead to sustainable software growth through second-half 2015 and into 2016," Olson writes.
- Mobile players are stable, but the number who'll pay is rising as well. Some 24% of teens who play mobile games by makers like Glu Mobile (GLUU +1.2%) and King Digital (KING -0.4%) say they spend in-game money, the survey said, up from 21% in the spring.
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