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Microsoft
stocks are trading higher after the software giant reported better-than-expected quarterly results. The company showed strength across the board, particularly boosted by the accelerated adoption of cloud computing.
For the fiscal second quarter ended December 31, Microsoft (ticker: MSFT) reported revenue of $ 43.1 billion, 17% more than a year ago, with earnings of $ 2.03 per share, up 34 %. That easily surpassed Wall Street’s consensus forecast for revenue of $ 40.2 billion and earnings of $ 1.64 per share.
“What we’ve seen in the past year is the dawn of a second wave of digital transformation that is engulfing every company and industry,” CEO Satya Nadella said in a statement. “Building their own digital capabilities is the new currency that drives the resilience and growth of any organization.”
CFO Amy Hood added that “growing demand for our tiered offerings drove commercial cloud revenue to $ 16.7 billion, up 34% year over year.”
Microsoft’s quarterly revenues were $ 5 billion for the first time, driven by 86% growth in Xbox hardware revenue as a result of the launch of a new generation of game consoles.
The company saw sales accelerate in all three product segments from the September quarter, where sales also exceeded expectations.
Revenue in the Productivity and Business Processes segment (including Office and LinkedIn) was $ 13.4 billion, up 13%, and above the target range of $ 12.75 billion to $ 13 billion.
For Intelligent Cloud, which includes the cloud platform Azure, revenue was $ 14.6 billion, an increase of 21%, well above the expected range of $ 13.55 billion to $ 13.8 billion. Azure revenues were up 50%, compared to growth of 48% in the September quarter.
Revenue in the More Personal Computing segment, which includes Windows and Surface tablets and computers, was $ 15.1 billion, up 14%, well above the company’s estimate of $ 13.2 billion to $ 13.6 billion. That includes a 40% increase in Xbox content and services.
Surface revenues slowed to 3% growth in the quarter from 37% in the September quarter; the company said the delay largely reflects the timing of its product launches a year ago, and that it would make sense for investors to look at Surface earnings over the two quarters taken together.
Microsoft said it returned $ 10 billion to holders in the quarter, including $ 6.5 billion in stock repurchases. The company closed the quarter with $ 132 billion in cash, equivalents and short-term investments, offset by $ 55 billion in long-term debt.
In a conference call with investors, CFO Hood said the company expects quarterly revenues in the productivity and business processes segment to range from $ 13.35 billion to $ 13.6 billion in March. Intelligent cloud revenues are expected to range from $ 14.7 billion to $ 14.95 billion. More Personal Computing revenues are expected to range from $ 12.3 billion to $ 12.7 billion. At the top of the range for each segment, sales for the quarter would be $ 41.25 billion, well above Street’s consensus at $ 38.7 billion. Hood also said the company expects double-digit gains in sales and corporate profits for the full fiscal year ending June 2021.
For the quarter ended September 30, Microsoft posted a 12% revenue increase to $ 37.2 billion, with earnings of $ 1.82 per share.
During today’s regular session, Microsoft closed 1.2% to $ 232.33, giving the company a market value of $ 1.77 billion, higher than any other company than
Apple
(AAPL). The stock is up 41% in the last 12 months.
During late trading Tuesday, Microsoft rose another 4.8% to $ 243.50.
Write to Eric J Savitz at [email protected]