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Microsoft Corporation (MSFT)

  • Apr. 24, 2014, 4:24 PM
    • Microsoft's (MSFT) Commercial revenue grew 7% Y/Y in FQ3 to $12.7B, a little below FQ2's 10% clip. Devices & Consumer revenue grew 12% to $8.3B after growing 13% in FQ2.
    • Commercial Licensing (50% of revenue, 65% of gross profit) sales +10% vs. +7%, with Windows volume licensing up 11% and and key server productivity offerings (Lync, SharePoint, Exchange) collectively growing double-digits.
    • Commercial Other +31% vs. +28%; 100% and 150% respective increases for Office 365 and Azure fueled the growth. The division is now nearly 10% of revenue, but still makes up less than 4% of gross profit (lower cloud margins).
    • D&C licensing rose 1% after falling 6% in FQ2, thanks in part to stabilizing PC sales; Windows OEM revenue rose 4%.
    • D&C hardware +41% (thanks to Xbox One sales) ahead of the Nokia deal's closing; Surface revenue totaled just $500M. D&C Other +18%; Office 365 Home added almost 1M subs, raising its total base to 4.4M.
    • Drops in sales/marketing and G&A spend led opex to fall 7% Y/Y to $7.49B. That boosted EPS, as did $1.8B in buybacks.
    • Satya Nadella hosts his first CC at 5:30PM ET, guidance will be provided.
    • MSFT +2% AH. FQ3 results, PR.
  • Apr. 24, 2014, 4:05 PM
    • Microsoft Corporation (MSFT): FQ3 EPS of $0.68 beats by $0.05.
    • Revenue of $20.4B (-0.4% Y/Y) in-line.
    • Shares +2%.
    • Press Release
  • Apr. 24, 2014, 12:10 AM
  • Apr. 23, 2014, 5:35 PM
  • Jan. 24, 2014, 12:32 PM
    • With equities getting routed today, Microsoft (MSFT +2.9%) has given back a chunk of the AH gains it saw following yesterday's FQ2 beat, but is still soundly outperforming.
    • By and large, the sell-side is pleased with Microsoft's enterprise strength, hardware sales, and cost controls. Credit Suisse has upped its PT to $42.50 from $40, while predicting Windows profitability and growth will improve in the next two quarters. It also expects Azure/Office 365 will generate "meaningfully higher" lifetime sales and profits than traditional licenses, in spite of near-term revenue cannibalization.
    • Jefferies is reiterating a Buy and $42 PT, and sees the "option value" on the Windows business (expected by the firm to decline 7.5%/year perpetually) rising following better-than-feared FQ2 numbers. But Goldman, which has been bearish since April, thinks FY14/FY15 estimates will keep dropping.
    • On the CC (transcript), CFO Amy Hood stated the macro environment is "a little better than [Microsoft] thought," and that enterprise Windows sales are benefiting both from Win. 7 upgrades and a shift towards more costly enterprise SKUs.
    • She also mentioned Microsoft was able to beat gross margin expectations in spite of a larger hardware mix by lowering costs in other areas, and claimed share gains in database (SQL Server) and systems management software (System Center).
    • More on Microsoft's FQ2
  • Jan. 23, 2014, 6:24 PM
    • Microsoft (MSFT) guides on its FQ2 CC for its various reporting segments to collectively post FQ3 revenue of $20B-$20.5B. That compares with a $20.47B consensus. Given two straight quarters of solid revenue beats, investors might view the guidance as conservative.
    • The software giant is also lowering its FY14 (ends June '14) opex guidance range to $31.2B-$31.5B from a prior $31.3B-$31.9B, and cutting its FY14 capex budget by $500M to $6B. Microsoft's original capex budget wasn't well-received when first issued.
    • Microsoft isn't shy about highlighting its FQ2 enterprise numbers: The company states server product sales rose 12% Y/Y, and Office Commercial and Windows volume licensing sales 10% apiece. It also estimates Hyper-V gained 5 points of virtualization share; Hyper-V has been taking share from VMware's (VMW) market-leading vSphere platform for some time.
    • Office consumer sales fell 24% Y/Y,; Microsoft attributes 2/3 of the drop to a shift to Office 365 Home Premium, which now has over 3.5M subs (up from 2M in October).
    • Microsoft's unearned revenue balance (non-GAAP) rose 12% Y/Y to $19.5B, and its contracted not billed balance rose 12% to over $23B.
    • MSFT +3.6% AH. FQ2 results, details, earnings slides (.ppt), guidance slides (.ppt)
  • Jan. 23, 2014, 4:30 PM
    • Microsoft's (MSFT) Commercial Licensing revenue (Office, enterprise Windows, and Server & Tools licenses) rose 7% Y/Y in FQ2 (even with FQ1), and accounted for 44% of revenue and 62% of gross profit.
    • Commercial Other revenue, meanwhile, jumped 28% Y/Y for the second straight quarter, thanks to continued triple-digit growth for commercial cloud (Azure, enterprise Office 365) revenue. But the segment's gross margin (23%) is well below that of Commercial Licensing (93%).
    • Microsoft asserts it "significantly outpaced enterprise IT spend" by taking share.
    • Professional Windows OEM license revenue rose 12% Y/Y thanks to strong corporate Win. 7 upgrade activity. That, in turn, resulted in total Windows OEM revenue falling only 3% (vs. -7% in FQ1 and -15% in FQ4) in spite of ongoing consumer weakness.
    • Devices & Consumer Licensing (Windows OEM, consumer Office, Windows Phone, Android royalties) revenue fell 6% Y/Y. D&C hardware, boosted by the Xbox One launch, grew 68% Y/Y. Microsoft says it sold 3.9M Xbox One units into retail channels, and that Surface revenue rose over 2x Q/Q to $893M. D&C Other (Xbox Live, consumer Office 365, Windows Store) revenue fell 10%.
    • Opex rose 3% Y/Y, less than revenue growth of 14%. $2.1B was spent on buybacks.
    • MSFT +3.9% AH. CC at 5:30PM ET, guidance will be provided.
    • FQ2 results, PR
  • Jan. 23, 2014, 4:05 PM
    • Microsoft Corporation (MSFT): Q2 EPS of $0.78 beats by $0.10.
    • Revenue of $24.52B (+14.3% Y/Y) beats by $850M.
    • Shares +3.1%.
    • Press Release
  • Jan. 23, 2014, 7:55 AM
    • Q4 NSN sales -22% to €3.1B ($4.2B), dragged down by asset sales. Adjusted operating profit fell to €349M from €576M a year earlier.
    • Expects NSN operating margins of 1-9% in Q1 vs forecast of 7.6% by Nordea analyst Sami Sarkamies and 11.2% in Q4. FY profit margin will be "toward the higher end" of a 5-10% profit range.
    • Ends the quarter with €9B in gross cash.
    • Sales at the devices business, which is being sold to Microsoft (MSFT), are €2.63B ($3.56B), -29% on year and -4.5% on quarter. "Strong momentum of competing smartphone platforms" and a difficult transition to Lumia from Symbian phones contributed to falling smartphone sales.
    • Nokia (NOK) shares -2.3%. (PR)
    • Previous
  • Jan. 23, 2014, 12:10 AM
  • Jan. 22, 2014, 5:35 PM
  • Jan. 17, 2014, 11:37 AM
    • Intel's (INTC -3.6%) partial blaming of weaker-than-expected Q4 server CPU division sales (revenue +8% Y/Y, but volumes only +1% Y/Y and -3% Q/Q) on a government shutdown comes across as a "bad excuse," thinks FBR.
    • Though reiterating an Outperform, FBR is skeptical about Intel's long-term 15% revenue CAGR target for its server CPU division. Bernstein questioned the division's growth outlook yesterday afternoon.
    • Goldman, reiterating a Sell (previous), says Intel's numbers "confirm our view that there is downside, not upside, to Intel's 2014 EPS." It's worried about both server CPU sales and a softening corporate PC upgrade cycle (driven by the Windows 7 transition) following Q1.
    • JPMorgan, which upgraded Intel going into earnings, is defending the company. It's pleased with stabilizing PC demand and dismisses server concerns, given sales have historically been volatile.
    • A major headwind faced by Intel's server CPU unit: Server industry revenues have been steadily declining, as demand shifts towards Web/cloud service providers with bigger economies of scale and a penchant for using cheap white-label hardware. IDC estimates total server sales fell 3.7% Y/Y in Q3, and that x86 server sales rose just 2.8%.
    • Microsoft (MSFT -1.6%) and AMD (AMD -1.1%) are ticking lower following Intel's report. So are server virtualization kingpin VMware (VMW -1.9%), parent EMC (EMC -0.9%), and rival Citrix (CTXS -0.8%). Intel suggested on its CC virtualization growth is softening.
    • More on Intel's Q4, CC transcript
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  • Jan. 17, 2014, 3:48 AM
    • Nintendo (NTDOF) has warned that it expects an operating loss of ¥35B ($336M) for the fiscal year through March instead of a profit of ¥100B, as the company had previously forecast. Analysts predict ¥54.7B.
    • Nintendo also projects a net loss of ¥25B vs a previous outlook for a profit of ¥55B, and it has cut its revenue estimate by 36% to ¥590B. The company will pay an FY dividend of ¥100 instead of ¥260.
    • Nintendo said the dramatic reversal was due to much lower-than-expected sales of its Wii U and 3DS games machines during the holiday season. That might have something to do with the success of Sony's (SNE) PlayStation 4 and Microsoft's (MSFT) Xbox One, both of which were launched in the run up to Christmas.
    • Nintendo now expects FY Wii U sales of 2.8M instead of 9M and 3DS sales of 13.5M vs 18M. The firm also cut its software outlook. (PR here and here.)
  • Oct. 25, 2013, 10:33 AM
    • "Our recent upgrade was based on the transition to the cloud, transparency for the 'BestCo' commercial assets and optionality on assumed low intrinsic value for Windows ... F1Q14 was positive for all these trends," writes Jefferies' Ross MacMillan, gloating about his recent bullish call on Microsoft (MSFT +6.6%) in the wake of the FQ1 beat. Nonetheless, he's slightly lowering his EPS estimates due to margin pressure related to the Xbox One launch.
    • Microsoft's Windows OEM "Pro" (enterprise) revenue rose 6% YY in FQ1, while "non-Pro" (consumer) revenue fell 22% (17% exc. China), several points better than expected.
    • On its earnings call (transcript), Microsoft guided for Devices & Consumer licensing revenue of $5.2B-$5.4B for seasonally strong FQ2. Business PC demand is expected to be steady, but consumer demand  will be"subject to more volatility." Hardware revenue is expected to rise 35%-45% Y/Y to $3.8B-$4.1B, aided by the Xbox One launch.
    • Microsoft's total commercial revenue is expected to grow 9%-11%, on par with FQ2. Commercial licensing revenue is expected to come in at $10.7B-$10.9B, and Commercial Other revenue (inc. Azure and Office 365) is expected to grow to $1.7B-$1.9B from FQ1's $1.6B. Opex is expected to rise 6%-8% Y/Y.
    • FQ1 results, details, slides (.ppt)
  • Oct. 24, 2013, 4:43 PM
    • Microsoft's (MSFT) new Commercial Licensing reporting segment (inc. Office and Server & Tools licenses, as well as enterprise Windows sales) posted 7% Y/Y revenue growth in FQ1, and accounted for 66% of the software giant's gross margin. Healthy growth for SQL Server, Lync, and SharePoint fueled the increase.
    • "Commercial cloud" sales rose 103% Y/Y, contributing to a 28% increase in Commerical Other revenue.
    • Windows OEM sales only fell 7% Y/Y after dropping 15% in FQ4. Surface revenue came in at $400M. Overall, Microsoft's Devices and Consumer Licensing revenue fell 7% Y/Y, and D&C hardware rose 37%. D&C Other, which includes Internet services, posted 17% sales growth.
    • MSFT +5.8% AH. FQ1 results, PR
    • Previous: Microsoft's new reporting segments
  • Oct. 24, 2013, 4:07 PM
    • Microsoft (MSFT): FQ1 EPS of $0.62 beats by $0.08.
    • Revenue of $18.53B (+16% Y/Y) beats by $740M.
    • Shares +5.8% AH. CC at 5:30PM ET. (PR)
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Company Description
Microsoft Corp is engaged in designing, manufacturing, selling devices, and online advertising to a global customer audience. Its products include operating systems for computing devices, servers, phones, and other intelligent devices.
Sector: Technology
Country: United States