MSFT stock

2022 - 7 - 26

Microsoft misses estimates but stock up 5% on rosy guidance (CNBC)

Microsoft said it would have had more revenue in the quarter were it not for unfavorable foreign-exchange rates and tougher PC and advertising markets.

The company said factory shutdowns in China in April and May and a worsening computer market in June reduced Windows revenue from device makers by $300 million. Sales of Windows licenses to device makers fell by 2% in the quarter. Still, a contraction in advertising spending resulted in a $100 million cut to revenue for the search and news advertising and LinkedIn categories. The More Personal Computing segment featuring the Windows operating system, Xbox video-game consoles, the Bing search engine and Surface devices delivered $14.36 billion in revenue for the quarter. In June, Microsoft reduced its quarterly income and revenue guidance guidance for income and revenue just because of rate fluctuations. That was up nearly 13% and slightly less than the StreetAccount consensus of $16.66 billion. Analysts surveyed by CNBC had expected 43.1%, while the consensus estimate from StreetAccount was 43.4%. Microsoft does not disclose Azure revenue in dollars. That was up 20% and below the consensus of $21.10 billion among analysts polled by StreetAccount. The company said revenue from Azure and other cloud services grew by 40%, compared with 46% in the prior quarter. Revenue and income for the quarter came in at the low end of the ranges that Microsoft had put forward in June. She said Microsoft would lengthen the useful life of server and networking equipment to six years from four years. The company's earnings per share fell short of consensus for the first time since 2016, with net income rising 2% to $16.74 billion.

Microsoft: Reassuring Q4 FY22 Results And New FY23 Outlook (Seeking Alpha)

Microsoft stock rose 4% in aftermarket trading after Q4 results and new FY23 outlook points to double-digit EBIT growth continuing.

Disclosure: I/we have a beneficial long position in the shares of MSFT either through stock ownership, options, or other derivatives. In addition, Q1 FY23 only represents the start of the year, which is expected to get better over time. Currency and prior-year OEM comparable are also expected to get better in H2. Xbox content and services revenues also declined, due to lower engagement hours (likely part of post-COVID normalization) and lower monetization of content, though Xbox Game Pass subscriptions grew. Q4 results marked a strong finish to FY22, with full-year Non-GAAP EPS growing 15.5% (19.8% reported). The quarter itself saw double-digit revenue growth again, though EPS growth was just 2.7% due to currency and tax. However, management stated that EBIT margin will be flat in local currencies excluding the benefit of this accounting change. We believe strong growth will continue in many of the businesses within Microsoft’s broad franchise, driving overall double-digit earnings growth. Costs also included 2 ppt of growth associated with the exit from Russia following its invasion of Ukraine. Despite these EBIT still grew 14% in local currencies, though only 7.5% in USD. Net Income again grew less than EBIT due to a higher tax rate. Our forecasts indicate a total return of 90% (24.8% annualized) by June 2025. - Management will continue to return capital to shareholders in dividends (an approx. FY23 guidance implies another year of double-digit EBIT growth in local currencies. MSFT stock’s gain since our initiation currently stands at 18% (including dividends), despite the significant correction among Technology stocks in the past year:

Why Microsoft's earnings guidance is more complicated than it seems (MarketWatch)

Microsoft Corp.'s outlook helped send its stock higher despite an earnings miss late Tuesday, but it became the subject of controversy among Wall Street...

“Commentary by management that they will both manage costs and invest aggressively to grow the business and take share added to confidence. “On the contrary, we see incremental signs of weakness (but not totally unexpected) across more consumer-oriented businesses, SMB and in cloud consumption.” We like the setup much better now.” Still, he titled his note to clients “The Golf Umbrella in a Macro Storm” while maintaining a buy rating and $320 price target on the stock. Wedbush analyst Dan Ives was upbeat about the forecast, saying it would be the “bullish guidance heard around the world and on the Street as the market digests this positive commentary in a darkening macro.” In his view, the outlook was “robust” and “healthy.” He added that “the guidance reset for Microsoft and other software names is the first step in pulling investor attention back to the space, and in our view, Microsoft did a solid job threading the needle in terms of the outlook (i.e. not too hot, not too cold).” Materne has an outperform rating and a $330 price target on the shares.

Microsoft (MSFT) Stock: Why It Increased Over 3% Today (Pulse 2.0)

Microsoft reported a Q4 EPS of $2.23, which was $0.06 lower than analyst estimates of $2.29. And the revenue for the quarter was $51.9 billion compared to the ...

This shows that Microsoft is continuing to see the benefits from hybrid work models, which was exacerbated by the pandemic. The company’s net income increased to $16.74 billion from $16.46 billion a year earlier. For Microsoft’s broader Intelligent Cloud division, the revenue was up 20% to $20.9 billion – which was ahead of the $19.1 billion estimates.

What Is Going on With Microsoft (MSFT) Stock Today? (Investorplace.com)

The company expects its top line and operating income to surge by at least 10% during its current fiscal year. Microsoft noted that its cloud revenue surged 28% ...

He called the outlook “bullish.” Labeling the guidance “sound,” Evercore ISI’s Kirk Matern kept a $330 price target and an “outperform” rating on the shares. Additionally, the company expects its margins to remain unchanged from FY22 during its current fiscal year. Microsoft (NASDAQ: MSFT) stock is rallying 5% today as investors and analysts were pleased with the company’s full-year guidance.

Despite Failing Q4 Expectations, Microsoft Stock Rose Over 6% (TipRanks)

Technology bigwig Microsoft Corporation (NASDAQ: MSFT) failed to meet fourth-quarter expectations on both revenue and earnings count. Yet, the stock rose ...

Overall, the stock commands a Strong Buy consensus rating based on 29 Buys and one Hold. The average Microsoft price target of $339.72 implies 34.9% upside potential to current levels. Ives noted, “MSFT just reported its June results which will be front and center across the Street to gauge cloud and enterprise demand in this swirling macro… Revenue growth will be driven by continued momentum in our commercial business and a focus on share gains across our portfolio.” Wedbush analyst Daniel Ives was encouraged to see Azure’s core growth in line with expectations and strong commercial bookings. Technology bigwig Microsoft Corporation ( NASDAQ: MSFT) failed to meet fourth-quarter expectations on both revenue and earnings count. Microsoft attributed the weak quarterly performance to unfavorable foreign exchange rates, extended shutdowns in China, slowing personal computer (PC) demand, and sluggish advertising spending.