Tue, Jan. 27, 12:40 PM
Tue, Jan. 27, 9:22 AM
- After selling off yesterday in response to Seagate's guidance, Intel (NASDAQ:INTC) and HP (NYSE:HPQ) are showing steep losses in premarket trading today after Microsoft (NASDAQ:MSFT) reported 13% Y/Y drops in both its Windows OEM Pro and non-Pro revenue, and offered conservative guidance. Microsoft is down 8.3%, and Nasdaq 100 futures are off 1.4%.
- Microsoft blamed the Windows OEM Pro decline on slowing business PC demand (following a boost driven by the end of Win. XP support), an unfavorable mix, and academic discounts. The OEM non-Pro decline was blamed on a mix shift towards cheaper hardware for which the software giant has cut or eliminated Windows licensing fees.
- Microsoft's server/data center-related sales were healthier: Server product/services revenue rose 9%, and commercial cloud revenue (Office 365/Azure) grew 114%. But on the CC (transcript), the company stated transactional server revenue "was down primarily due to a declining traditional server market." A shift in demand towards Web/cloud data centers often relying on Linux servers might also be a factor here.
Tue, Jan. 27, 9:10 AM
Tue, Jan. 27, 7:43 AM
- "After a lengthy 16-month period of multiple expansion for Microsoft’s (NASDAQ:MSFT) stock, we see a tougher transition ahead, and move to the sidelines," says Nomura's Rick Sherlund, cutting to Neutral with the price target lowered to $50 from $56.
- JPMorgan downgrades to Neutral with price target cut to $47 from $53.
- Never a big fan in the first place, Citi cuts to Sell from Neutral.
- MKM Parters downgrades to Neutral.
- Shares -7.8% premarket
- Previous earnings coverage
Mon, Jan. 26, 4:42 PM
- Microsoft's (NASDAQ:MSFT) Window OEM Pro and non-Pro revenue both fell 13% Y/Y in FQ2. The Pro slowdown is blamed on slowing business PC sales, academic discounts, and "mix returning to pre-Windows XP end of support levels." The non-Pro decline is due to unit growth coming from cheaper hardware that Microsoft is providing discounted license fees for. Commercial Windows volume license revenue rose 3%.
- Total Commercial revenue rose 5% Y/Y in FQ2 to $13.3B, helping drive the revenue beat. Devices & Consumer revenue (lifted by the Nokia deal) rose 8% to $12.9B. Commercial reporting segments accounted for over 2/3 of FQ2 gross profit of $16.3B.
- Segment performance: Commercial licensing revenue -2% Y/Y to $10.7B (hurt by the cloud shift). Commercial other +46% to $2.6B (boosted by cloud growth). Device/consumer licensing -25% to $4.2B (Windows and Android royalty declines). Computing/gaming hardware -11% to $4B (Xbox One launched a year ago). Phone hardware revenue was $2.3B, above guidance of $2B-$2.2B but down from FQ1's $2.6B (feature phone decline).
- Highlights: 1) Commercial cloud revenue (Office 365, Azure, Dynamics online) +114% Y/Y, and now on a $5.5B/year run rate 2) 10.5M Lumias and 6.6M Xboxes were sold. Surface revenue +24% to $1.1B. 3) Server products/services +9%, with double-digit SQL Server and System Center growth. 4) Search ad revenue +23%; Bing's U.S. share is at 19.7% (per comScore).
- With Nokia boosting spending levels in spite of last year's job cuts, R&D spend rose 6% to $2.9B, and sales/marketing 7% to $4.3B. G&A, however, fell 8% to $1.1B.
- $2.1B was spent on buybacks. Microsoft plans to complete its existing $40B buyback program (launched in Sep. 2013) by the end of 2016.
- Microsoft is at $45.59 in AH trading. Guidance will be provided on the CC.
- FQ2 results, PR
Fri, Jan. 23, 6:19 PM
- BOX closed up 65.4% from its $14 IPO price, leaving it with a $2.77B market cap (15% above the valuation for its last funding round). 41.4M shares changed hands, or 3.3x the 12.5M sold through its IPO (before factoring the overallotment option).
- Co-founder/CEO Aaron Levie, best known to some for his Twitter one-liners, made the rounds today, arguing more than once his company's offerings are well-differentiated from the aggressively-priced cloud storage/file-sharing services of tech giants.
- Levie during a talk with Barron's: "What we’ve built really is software to help manage and collaborate and share throughout the business ... ultimately our customers buy our solution because we have built an amazing product to manage all that content. We get compared to more storage-oriented products, but there’s more to it."
- He called Microsoft (NASDAQ:MSFT), whose SharePoint collaboration platform is widely deployed and which is now offering unlimited OneDrive storage to Office 365 subs, Box's biggest competitor, but also one Box can stand out relative to. "I think our real differentiation is we do all the enterprise-oriented delivery, the industry compliance for FINRA, the security, and all that — but the really unique part is we deliver that in a consumer-grade experience, with open APIs, and that works across platforms."
- Levie suggests to Forbes Box will focus going forward on giving clients more tools for using/interpreting data, pointing to its recent acquisition of medical image-sharing platform MedXT as an example. He also notes Box is investing in industry-specific machine learning tools that analyze content to organize, surface, and recommend documents.
- Prior Box coverage
- Prospectus, IPO analysis
Wed, Jan. 21, 2:35 PM
- Microsoft (MSFT -1.6%) has followed up on its Windows 10 reveal by unveiling new hardware. Getting the most attention is HoloLens, a headset declared to be "the most advanced holographic computer the world has ever seen."
- The device contains a see-through display that allows users to see holograms in their real-world environments, and doesn't require a connection to a PC or phone. Microsoft has christened the augmented reality platform underpinning it Windows Holographic.
- HoloLens is expected to launch around the same time as Windows 10. LCoS microdisplay vendor Himax (HIMX +5.4%), previously rumored to be working with Microsoft, has spiked higher.
- Also unveiled: Surface Hub, an 84" 4K touch display sporting dual cameras and sensors, running Windows 10, and providing quick access to Skype video calls and a digital whiteboard. The product, which presumably won't be cheap, appears to be aimed at conference rooms.
- As rumored, Microsoft's Spartan browser sports a streamlined UI, Cortana integration, a note-taking/annotating stylus mode, and a new rendering engine that delivers improved performance. It also has a Reading Mode that formats Web pages to resemble e-books.
- A slew of new universal apps (they feature similar PC and phone/tablet UIs) have been shown off. OneDrive, a photos app, and a People app are among the covered products. New Office apps for phones and small tablets have been previewed, and so has the ability to run universal Windows apps on the Xbox One.
- Earlier: Microsoft details Windows 10, promises free upgrades
Dec. 18, 2014, 2:04 PM
- With the help of stronger-than-expected hardware sales, Oracle (ORCL +9.2%) beat FQ2 estimates in spite of a 400 bps forex headwind (twice what was originally expected). FQ3 guidance was conservative after taking forex pressures into account.
- The numbers have been good enough for Oracle to surge to new highs and receive a slew of target hikes, and to lead many enterprise tech names to outperform amid a big market rally. The Nasdaq is up 1.9%.
- Microsoft (MSFT +3.2%), Cisco (CSCO +2.3%), EMC (EMC +3.7%), VMware (VMW +5.1%), and beaten-down IBM (IBM +2.8%) are among the enterprise tech names outperforming today. Others: SPLK +4.6%. CA +3.5%. RHT +3.4%. VRNS +6.3%. PCTY +5.8%. JIVE +4.6%. VMEM +5.2%. SAAS +4.7%. BRCD +3.8%.
- Oracle's healthy cloud software numbers are drawing attention: While traditional software license revenue fell 4% Y/Y, its SaaS/PaaS revenue rose 41%. SaaS/PaaS bookings totaled $170M, and are expected to be "well over" $1B in FY16 (ends May '16). Fusion cloud app bookings rose over 100%.
- On the CC (transcript), Oracle performed its customary trash-talking of cloud app rivals. "We are clearly growing faster than Salesforce (CRM +4%) and were more than three times the size of Workday (WDAY +3.2%)." Both firms are posting solid gains.
- Oracle's numbers come as Bloomberg reports the Chinese government is looking to "purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020." IBM, Cisco, and other U.S. firms have already seen their Chinese sales fall sharply following last year's NSA spying uproar.
Dec. 16, 2014, 8:38 AM
- Microsoft's (NASDAQ:MSFT) outperformance of late is concerning, says analyst Kash Rangan downgrading to Underperform with $47 price target; especially in an environment of a slowing Win Pro cycle, an "elongated" Consumer Office 365 transition, the challenge of margin leverage, and sell-side exuberance over one-time financial moves.
- Under a "best case" scenario of a $30B buyback and $4B in operating expense cuts, Microsoft could run out of room for earnings growth, leading to a re-rating of the P/E ratio.
- Shares -1.3% premarket
Dec. 4, 2014, 9:49 AM
- Along with its FQ2 results, Barnes & Noble (BKS -11.4%) has announced it's buying Microsoft's (MSFT +1.6%) stake in Nook Media for $62.4M in cash and 2.7M shares (current value of $52.8M). The companies have also "agreed to terminate their commercial agreement." (8-K)
- With Microsoft having invested $300M in Nook Media (contains B&N's Nook hardware, online bookstore, e-book, and college bookstore ops) in 2012 for a 17.6% stake, the software giant is taking a ~$185M loss on its investment.
- B&N's Nook segment revenue (covers hardware, digital content, and accessories) fell 41.3% Y/Y in FQ2 to just $62M, thanks to tough competition from Amazon and ongoing tablet cannibalization of e-readers. B&N's college segment saw revenue rise 1.9% to $751M.
- The sale follows Microsoft's July decision to lay off roughly half the workers in its Nokia phone unit, as part of a broader restructuring.
Nov. 4, 2014, 11:02 AM
- In what's a surprise move given the companies' rivalry, Microsoft (MSFT -0.1%) is partnering with cloud storage/file-syncing giant Dropbox to tightly integrate Office's PC, mobile, and cloud apps with Dropbox's service.
- Among other things, Dropbox users will be able to link their accounts with the Office iPad apps (enabling quick file-viewing, editing, and cloud saving), and the editing of files accessed via Dropbox's Web app will be handled by default through the Office Web Apps, with saved docs than being stored back on Dropbox.
- News of the tie-up comes just a week after Microsoft announced plans to give all Office 365 subs unlimited cloud storage through its OneDrive service (already tightly integrated with Office), thereby deeply undercutting Dropbox and many other rivals.
- Much like many other moves (I, II) Microsoft has made to support rival/alternative platforms since Satya Nadella became CEO, this one seems driven by pragmatism: Dropbox's base include 300M+ users (70% outside the U.S.) and 4M businesses, and its service has been used to store 35B Office docs.
Oct. 23, 2014, 4:30 PM
- Microsoft's (NASDAQ:MSFT) Commercial revenue rose 10% Y/Y in FQ1 to $12.28B, nearly even with FQ4's 11% growth. Server products/services +13%; Office commercial products +5%; commercial cloud (Azure, Office 365, Dynamics cloud apps) +128%.
- Windows Server, SQL Server, and System Center each grew by double digits, and Lync, SharePoint, and Exchange collectively saw double-digit growth. Windows volume licensing +10%.
- Devices & Consumer revenue (boosted by the Nokia deal) +47% to $10.96B. Phone hardware revenue totaled $2.6B, down from $3.9B a year ago but above guidance of $1.9B-$2.3B. 2.4M Xboxes were sold (+102% thanks to the Xbox One launch), and Office Home/Personal subs rose by ~1.4M Q/Q to 7M+. Surface revenue totaled $908M.
- One soft spot: Dollar-wise, a 9% drop in D&C Licensing revenue to $4.09B more than offset a 16% increase in D&C Other revenue (inc. Web and cloud services) to $1.81B. OEM non-Pro Windows revenue fell 1%, though Windows consumer unit growth was positive.
- Commercial Licensing made up 61% of Microsoft's gross profit, and Commercial Other (inc. cloud services) 5%. D&C Licensing accounted for 26%, and D&C Other just 2%.
- $2.9B was spent on buybacks. The unearned revenue balance rose 11% Y/Y to $22.5B.
- MSFT +2.8% AH. FQ1 results, PR.
Oct. 23, 2014, 4:05 PM
Oct. 20, 2014, 9:19 AM
- IBM missed Q3 estimates, pulled its $20 2015 EPS forecast, and respectively reported 15% and 7% Y/Y drops in hardware revenue and services backlog.
- Big Blue also stated it "saw a marked slowdown in September in client buying behavior," and declared its numbers "also point to the unprecedented pace of change in our industry" (at least partially a reference to cloud services adoption).
- SAP missed Q3 revenue estimates (while posting in-line EPS), reported a 3% Y/Y drop in traditional software license revenue, and (citing the cloud transition) cut its full-year op. profit outlook.
- Microsoft (NASDAQ:MSFT) -0.8% premarket. H-P (NYSE:HPQ) -2% premarket. Oracle (NYSE:ORCL) -1.8%. EMC -0.8%. There's a good chance other enterprise IT names will trade lower as well.
Sep. 17, 2014, 9:02 AM
- The 10.7% boost in the quarterly payout to $0.31 per share (an annualized yield of 2.65% based on last night's close) is below expectations, says Goldman, maintaining its Sell rating and $36 price target.
- The increase, however, was roughly inline with a Bloomberg survey which estimated the dividend being lifted to $0.30.
- Among those positing a more aggressive move was Citi's Walter Pritchard, who saw a boost of maybe 25% along with targeting a payout ratio of around 70% for the fiscal year ending next June.
- MSFT -1% premarket
- Previously: Microsoft hikes dividend 11%, adds two new directors
Sep. 10, 2014, 2:38 PM
Other News & PR