Microsoft Corp. wrapped up a record year on Wednesday by announcing record quarterly earnings, but stocks still dipped from near-record highs in post-close trading.
Microsoft MSFT,
reported fourth-quarter tax earnings of $ 11.2 billion, or $ 1.46 a share, on revenue of $ 38 billion on Wednesday, after posting $ 1.71 a share in sales sales of $ 33.71 billion a year ago. Analysts on average expect earnings of $ 1.34 per share on sales of $ 36.54 billion, according to FactSet.
That performance concludes a year of record profits and sales, despite the start of the COVID-19 pandemic toward the end of Microsoft’s fiscal year. For the year, Microsoft reported sales of $ 44.28 billion in sales of $ 143 billion, an increase of 13% and 14% respectively from the previous year’s record performance.
Microsoft shares have appreciated amid gains. Shares are up more than 34% so far this year, as the S&P 500 SPX,
It has gained 1.4%, pushing Microsoft’s market capitalization to more than $ 1.6 trillion. Shares fell 2% -3% less in after-hours trading on Wednesday immediately after the results, after closing at $ 211.75, a few dollars below the record close of $ 214.32 established earlier this month. month.
Those gains could well continue. In a conference call with analysts on Wednesday night, Microsoft Chief Financial Officer Amy Hood offered first quarter revenue tax guidance for business and productivity solutions ($ 11.65 billion to $ 11.9 billion), smart cloud ($ 12.55 billion to $ 12.8 billion) and more personal computing ($ 10.95 billion to $ 11.35 billion) that was roughly in line with or slightly above FactSet estimates.
Several times during the call, Hood and CEO Satya Nadella noted the continued strong performance of the cloud and the communication and collaboration platform of the Microsoft teams.
Microsoft has thrived during the pandemic as its Azure cloud computing offering and cloud software offerings have become more essential as its corporate customers sent their employees home to work remotely. The legacy business of personal computers has also been booming as businesses and consumers replace computers that are suddenly becoming more used amid shelter-in-place restrictions due to the virus.
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Microsoft announced Wednesday that its “Smart Cloud” division, which includes Azure and other offerings like local servers, accumulated $ 13.4 billion in sales in the fiscal fourth quarter, 17% and more than the average analyst estimate of $ 13.11. billion Microsoft, which does not disaggregate Azure’s performance individually, said revenue from the cloud computing division rose 47%.
“Our business cloud exceeded $ 50 billion in annual revenue for the first time this year. And this quarter our business reserves were better than expected, growing 12% year-over-year, ”Hood said in Wednesday’s announcement.
The “More Personal Computing” segment, which includes the legacy Windows business, as well as Xbox games and some other properties, reported revenue of $ 12.9 billion, up 14% from $ 11.28 billion a year ago. Analysts on average expected the PC-centric business to produce revenue of $ 11.48 billion, according to FactSet.
“Productivity & Business Solutions”, which comprises the majority of cloud software assets, including Teams and LinkedIn, reported revenues of $ 11.8 billion, 6% more than a year ago, but below the average estimate of analysts $ 11.91 billion. Equipment usage increased to 75 million in June from 44 million in March, prompting an antitrust complaint from Slack Technologies Inc. JOB,
to the European Commission earlier in the day. Microsoft announced layoffs on LinkedIn earlier this week, but said the division’s revenue increased 10% in the quarter.
The LinkedIn layoffs aren’t the only changes at Microsoft amid the pandemic. The company also decided to close its retail stores during the quarter, and also closed the Mixer video game streaming effort, sending the assets to Facebook Inc. FB,
. The company said Wednesday it posted a $ 450 million charge in the quarter related to the closure of its retail stores, though that was more than eliminated by a $ 2.6 billion net tax revenue benefit.
Read: Technology has been a pandemic savior and has been widely rewarded. What happens now?
While such moves could be a sign of concern for investors, analysts remain positive regarding Microsoft’s outlook due to Nadella’s successes in refocusing business on the go. Since Nadella took over as CEO in early 2014 and made the cloud the primary focus of Microsoft, the shares have more than quintupled.
“They have made the right poker moves, Nadella has had one of the most transformative changes in the past 30 years,” Wedbush analyst Dan Ives said when asked about retail and mixer decisions in a tech earnings interview. with MarketWatch earlier this month. . Ives is rated higher and has a $ 260 price target on Microsoft stock.
By evaluating the quarter in a note on Wednesday night, Ives maintained his rating and target price. “For Redmond, this change in the cloud and the WFH [work from home] The dynamics seem to be here to stay and the company will become a major beneficiary of this trend in its flagship Azure / Office 365 franchise in the coming years, ”he said.
Contributing: Jon Swartz
.
