S&P 500
7,507.80
-0.22%
Dow Jones
51,595.40
-0.32%
Nasdaq 100
30,411.80
-0.23%
Russell 2000
2,975.48
-0.09%
FTSE 100
10,384.80
-0.34%
Nikkei 225
71,987.20
+0.02%

Technology

Microsoft Earnings Can’t Overcome Investor Higher Expectations

Photo of Paul Ausick
By Paul Ausick Updated Published
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Microsoft Earnings Can’t Overcome Investor Higher Expectations

© courtesy of Microsoft Corp.

Microsoft Corp. (NASDAQ: MSFT) reported fiscal second-quarter 2018 results after markets closed Wednesday. The software behemoth reported diluted earnings per share (EPS) of $0.96 on revenues of $28.9 billion. In the same period last year the company reported EPS of $0.80 on revenues of $225.83 billion. The consensus estimates called for EPS of $0.86 on revenues of $28.39 billion.

On a GAAP basis, the company reported a net loss per share of $0.82 due to a net charge of $13.8 billion related to the new U.S. tax law.

Microsoft returned $5.0 billion to shareholders in the form of share repurchases and dividends in the second quarter of fiscal year 2018.

[nativounit]

The company’s CFO, Amy Hood, said:

We delivered another strong quarter with commercial cloud revenue growing 56% year-over-year to $5.3 billion. Strong execution from our sales teams and partners is driving growth across our businesses.

Intelligent cloud revenue rose 15% and Windows OEM revenue rose 4% both nominally and in constant currency. The company now claims 29.2 million subscribers to its Office 365 Consumer subscription base. Revenue growth in the company’s Azure platform rose 98% year over year.

Microsoft did not offer guidance in its press release, but said that it would provide guidance during its conference call later this afternoon.

The consensus estimate for the company’s 2018 third fiscal quarter calls for EPS of $0.78 on revenues of $25.51 billion. For the full fiscal year ending in June 2018, EPS is forecast at $3.40 on revenues of $106.4 billion.

Revenue from sales of the company’s 2-in-1 Surface rose by 1% and search advertising revenue rose 15%, excluding traffic acquisition costs and driven by higher revenue per search and more searches.

LinkedIn contributed $1.3 billion to second-quarter revenue.

Shares traded down about 1.5% at $93.70 in after-hours trading. The stock closed at $95.01 in a 52-week range of $62.75 to 95.45. Prior to the earnings announcement the 12-month consensus price target on the stock was $98.55.

[recirclink id=437611]

[wallst_email_signup]

DISCLOSURE:
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA(www.finra.org)/SIPC(www.sipc.org). Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 30 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Other fees, such as exchange fees, may apply. Please view our fee disclosure to view a full listing of fees. Investing in alternative investments and/or strategies may not be suitable for all investors and involves unique risks, including the risk of loss. An investor should consider their individual circumstances and any investment information, such as a prospectus, prior to investing. Interval Funds are illiquid instruments, the ability to trade on your timeline may be restricted. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA(www.finra.org) /SIPC(www.sipc.org). There are limitations with fractional shares to consider before investing. During market hours fractional share orders are transmitted immediately in the order received. There may be system delays from receipt of your order until execution and market conditions may adversely impact execution prices. Outside of market hours orders are received on a not held basis and will be aggregated for each security then executed in the morning trade window of the next business day at market open. Share will be delivered at an average price received for executing the securities through a single batched order. Fractional shares may not be transferred to another firm. Fractional shares will be sold when a transfer or closure request is initiated. Please consider that selling securities is a taxable event. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire investment Before trading options please review the Characteristics and Risks of Standardized Options  Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation.
Follow 24/7 Wall St. on Google
Photo of Paul Ausick
About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

Latest Podcast Episode

SpaceX Goes Public! Is It A Launch Pad For Investors Or A Black Hole?

Play

41 min
Apple Podcasts Spotify

Continue Reading

Microsoft Earnings Reflect Wide Range of Revenue Hikes
Paul Ausick |

Microsoft Earnings Reflect Wide Range of Revenue Hikes

Microsoft beat both earnings and profit estimates in its first fiscal year 2018 quarter. Intelligent cloud revenue rose 13%.

Could Microsoft Earnings Have Been Better?
Paul Ausick |

Could Microsoft Earnings Have Been Better?

Microsoft reported results that beat both top- and bottom-line estimates and posted solid growth in each of its businesses. Investors…

Why Microsoft Earnings Just Keep Rocking Along
Paul Ausick |

Why Microsoft Earnings Just Keep Rocking Along

Microsoft's commercial cloud business just keeps on growing. The company posted a new 52-week high Wednesday that could be beaten…

Microsoft Earnings Foreshadow Another Yearly High on Friday
Paul Ausick |

Microsoft Earnings Foreshadow Another Yearly High on Friday

Microsoft beat consensus estimates for quarterly and full-year profits and revenues. The stock posted a new 52-week high Thursday and…

Microsoft Earnings Soar With the Clouds
Paul Ausick |

Microsoft Earnings Soar With the Clouds

Microsoft is on track to open at a new all-time high Friday morning after report better-than-expected fourth-quarter 2018 results Thursday…

Paul Ausick |

Microsoft Earnings Overcome Nokia, Restructuring Costs

Microsoft reported better-than-expected first-quarter fiscal 2015 results after markets closed Thursday.

Paul Ausick |

Microsoft Earnings Got Pounded by Nokia Losses

Microsoft reported mixed fiscal fourth-quarter results after markets closed Tuesday. The newly acquired Nokia business contributed an operating loss of…

COVID-19 Doesn’t Disturb Microsoft Earnings
Paul Ausick |

COVID-19 Doesn’t Disturb Microsoft Earnings

Microsoft's third fiscal-quarter results topped estimates but didn't thrill investors.

Why Microsoft Earnings Are Causing Investors to Sell
Paul Ausick |

Why Microsoft Earnings Are Causing Investors to Sell

Microsoft reported fiscal third-quarter 2017 results after markets closed Thursday. The company reported adjusted EPS of $0.73 on adjusted revenues…

Top Gaining Stocks

CarMax
KMX • Vol: 7,330,419
Corning
GLW • Vol: 22,800,969
Intel
INTC • Vol: 233,719,006
Super Micro Computer
SMCI • Vol: 68,465,534
Enphase Energy
ENPH • Vol: 13,978,376

Top Losing Stocks

Accenture
ACN • Vol: 41,744,333
EPAM Systems
EPAM • Vol: 5,636,587
Cognizant
CTSH • Vol: 61,311,400
Coterra Energy
CTRA • Vol: 73,319,495
Kroger
KR • Vol: 26,704,230