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Microsoft is driving the cloud to account for sales growth

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Microsoft on Tuesday met analysts’ expectations for quarterly sales and beat earnings forecasts, but its shares fell slightly, reflecting some skepticism about the one-time benefits included in the results and high hopes after a one-year rally.

By grabbing market share in the thriving cloud market and expanding business services like its Teams cooperation service and LinkedIn The social network, Redmond, Washington, has become one of the most valuable companies in the world, worth nearly $ 2 trillion (approximately kroner) after a 50 percent stock over the past year.

These services were still in demand during the pandemic, with Microsoft’s Azure cloud service closes space for market share leader Amazon Web Services and grew by 50 percent during the quarter. People who work and study from home buy new computers and video consoles, boosting Microsoft Windows and the video game business.

Net profit for the third quarter ended March 31 jumped 44% year-on-year to $ 15.5 billion (approximately 1.15,380 kroner). Earnings and adjusted earnings per share were $ 41.7 billion (roughly Rs. 3.10 380 crore) and $ 1.95 (approximately Rs. 150) per share, above analysts’ estimates of $ 41.03 billion. Rs 3.05,400 kroner) and 1.78 USD (approximately Rs. 130) per share, according to data from Refinitiv.

Shares fell 2.5 percent, sharing some deeper losses after managers gave a better-than-expected forecast during a conference call with investors.

“One-time tax and currency benefits boosted Microsoft’s numbers for the third quarter, and as a result, the market is not as welcoming as you would expect,” said Nicholas Hayette, a stock analyst at Hargreaves Lansdown. The net profit included favorable tax relief of $ 620 million (approximately 4,610 kroner) from court decisions in India.

“This is the danger of trading in the way Microsoft enjoys, 32.8 times next year’s profits. Disappoint even a little and the market will be uncompromising.”

Sales for what Microsoft calls its “cloud” – which contains a server infrastructure such as Azure along with cloud-based versions of Office software, rose 33 percent to $ 17.7 billion (approximately Rs 131,730). Sales for Dynamics 365 customer management, which competes directly Salesforce, increased by 45 percent and the business version of Office 365 added 15 percent more users.

“This is the fourth consecutive quarter of 15 percent seat growth at a very large base,” Microsoft Chief Financial Officer Amy Hood said of the results of Office 365 for retail customers.

Microsoft continued to double the cloud-based software, it said earlier this month would buy artificial intelligence firm Nuance Communications for $ 16 billion (approximately Rs 1,19,090 crore), excluding net debt, to strengthen its healthcare business.

Microsoft said Azure, its closely monitored cloud computing business, is competing On Amazon Alphabet’s Amazon Web Services and Google Cloud grew 50% during the quarter, or 46% when adjusted for currency variations. This is lower than the currency-adjusted 48 percent for the quarter before, but in line with analysts’ expectations for growth of 46.3 percent, data from Visible Alpha show.

Total sales of Microsoft’s “smart cloud” containing Azure are $ 15.1 billion (approximately 1.12,400 kroner), above analysts’ estimates of $ 14.92 (approximately 1.11,060 kroner) billion, according to Refinitiv. .

Microsoft Teams has 145 million daily users, up from 115 million in October, Microsoft said. Sales of Microsoft’s performance software unit, which includes Office and Teams, were $ 13.6 billion (approximately 1.01 235 kroner), compared with estimates of $ 13.49 billion (approximately 1 400 400 kroner), according to the Refinitive.

Sales on his social network LinkedIn rose 23 percent on a currency basis, slightly above Visible Alpha’s estimates of 21.9 percent as revenue continued to recover from a sharp drop in job postings and hiring at the start of the pandemic.

Microsoft’s personal computing unit that contains its own Windows operating system and Xbox game console, has sales of $ 13 billion (approximately 96,750 kroner), compared to analysts’ expectations of $ 12.57 billion (approximately 93,510 kroner), according to Refinitiv. Windows sales to computer makers rose 10 percent, up 1 percent from a quarter earlier.

During a conversation with investors, Microsoft forecasts fiscal revenues from the productivity segment for the fourth quarter with an average of 13.93 billion dollars (approximately 1.03 630 kroner), above the estimates of Refinitiv of 13.57 billion dollars (approximately 1.00 950 crore). Its sales projections for the smart business in the cloud and personal computing averaged $ 16.32 billion (approximately 1.21,405 kroner) and $ 13.80 billion (approximately 1.02.660 kroner), respectively, above estimates of $ 16.0 billion. dollars (approximately Rs. 1, 19 030 kroons) and 13.26 billion dollars (approximately Rs 98 640 kroons), according to Refinitiv.

© Thomson Reuters 2021

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