por admin » Mar Oct 27, 2020 3:17 pm
Microsoft earnings are out – here are the numbers
PUBLISHED TUE, OCT 27 20203:32 PM EDTUPDATED 1 MIN AGO
Jordan Novet
@JORDANNOVET
Microsoft’s gross margin will benefit from an accounting change related to depreciation of server equipment.
Growth from LinkedIn and search advertising should slow down because of the coronavirus pandemic in the quarter.
Satya Nadella, CEO of Microsoft, is pictured at Microsoft's annual shareholder meeting in Bellevue, Washington on November 30, 2016.
Satya Nadella, CEO of Microsoft, is pictured at Microsoft’s annual shareholder meeting in Bellevue, Washington on November 30, 2016.
Jason Redmond | AFP | Getty Images
Microsoft shares moved 1% higher in extended trading on Tuesday after the company reported fiscal first-quarter results that were better than analysts had expected.
Here’s how the company did:
Earnings: $1.82 per share, adjusted, vs. $1.54 per share as expected by analysts, according to Refinitiv.
Revenue: $37.15 billion, vs. $35.72 billion as expected by analysts, according to Refinitiv.
Microsoft revenue grew 12% on an annualized basis, down from 13% growth in the prior quarter.
Microsoft is also likely to give insight into the business impact from the Nov. 10 release of new Xbox consoles.
This is the first quarter Microsoft will benefit from an accounting change that extended the useful life of its server equipment from three years to four years. That adjustment could lift Microsoft’s gross margin while some parts of Microsoft, such as LinkedIn and search advertising, experience slowdowns -- in some cases because of the coronavirus pandemic. Microsoft is also expected to receive less revenue growth from companies upgrading Windows and Windows Server after the company ended support for older versions.
“With most of this benefit expected to be absorbed in Commercial Cloud, we think the accounting changes will buttress continued margin expansion in FY21, addressing one of the main concerns investors had coming into the new fiscal year, considering the headwinds from the lower margin console cycle and as we lapse the tailwinds previously felt in the higher-margin Server & Tools and Windows OEM segments,” Morgan Stanley analysts Keith Weiss and Josh Baer, who have the equivalent of a buy rating on Microsoft stock, wrote in a note distributed to clients earlier this month.
With respect to guidance, analysts polled by Refinitiv are expecting $40.43 billion in fiscal second-quarter revenue, which implies 9.5% growth.
In the quarter Microsoft announced the $7.5 billion acquisition of Zenimax Media, the company behind video game franchises such as Doom and Quake, and Microsoft failed to make a deal involving the video-sharing app TikTok.
In January Microsoft announced a goal to be carbon-negative, which would involve removing more carbon than it emits, by 2030. In the fiscal first quarter Microsoft provided an update, saying it had extended an internal carbon tax to all parts of its operations and updated its code of conduct for suppliers so that suppliers will have to specify their emissions.
The company will give guidance and discuss the quarter’s results on a conference call with analysts starting at 5:30 p.m. Eastern time.
Microsoft shares are up about 36% since the start of 2020, while the S&P 500 is up 5% over the same period.
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