Home » Business » Balance sheet presented: Microsoft stock in green: Microsoft with jump in sales and profit | news

Balance sheet presented: Microsoft stock in green: Microsoft with jump in sales and profit | news


Microsoft earned more than expected in its second quarter thanks to its strong cloud business. Some investors had expected even stronger growth in the cloud business, Stifel analyst Brad Reback explained the initially negative price reaction. In the telephone conference with analysts, however, CFO Amy Hood again promised a higher growth rate for the current quarter.

The company, based in Redmond, a city in the Greater Seattle area, reported net income of $18.8 billion for the quarter ended December on Tuesday night after the US market close. Compared to the previous year, this corresponded to an increase of 21 percent. Sales broke the $50 billion mark for the first time, rising 20 percent to $51.7 billion. Analysts had estimated earnings at $17.5 billion and sales at $50.7 billion. Earnings per share for the quarter were $2.48 (prior year: $2.03). According to a fact set consensus, the analysts had expected only $2.32 per share.

Revenues related to the cloud service Azure increased by 46 percent. While that was down from the previous two quarters of 50 and 51 percent, analysts had seen Azure revenue grow just 45.3 percent. Azure has become a bigger revenue stream for Microsoft over the past year than the Windows operating system. The trend towards working from home and homeschooling caused by the Corona crisis gave Microsoft’s cloud computing business an additional boost. In the field of video games, Microsoft reported sales of 17.47 (previous year: 15.12) billion dollars. According to Factset, analysts had estimated sales in this segment at $16.62 billion.

Microsoft had recently declared that it wanted to expand its already not small business in this area by taking over a heavyweight from the video game industry. The software giant plans to acquire Activision Blizzard for $68.7 billion in cash. If successful, the transaction would be the largest in the company’s history. With Activision, Microsoft would expand its Xbox gaming console business, as well as games like Minecraft and Doom, to include some of the most popular offerings on the market, including Call of Duty, World of Warcraft and Candy Crush.

The figures met with a positive response from analysts. Microsoft did excellently, wrote analyst Ingo Wermann from DZ Bank. “All revenue and earnings growth lights are green.” In the technology sector, the papers are a defensive basic investment for him. According to Goldman Sachs analyst Kash Rangan, the previous night’s after-hours losses were overdone. Expert Rishi Jaluria from the Canadian bank RBC called the quarterly figures solid and was particularly impressed by the outlook for the third business quarter.

High growth rates, as reported by Microsoft, are more common in new companies, but not in established and industry-dominating corporations, explained capital market strategist Jrgen Molnar from the broker RoboMarkets. Now the takeover of Activision Blizzard and the implementation in the group is particularly important for Microsoft. If this succeeds, further price potential should be associated with it. Microsoft had announced the purchase of the game developer for almost 70 billion dollars last week and wants to strengthen its own gaming division.

The software group is on the market in a small circle with companies whose stock market valuation is 13 digits. Despite falling more than 14 percent year-to-date amid the tech sell-off, the market cap is still around $2.2 trillion as of Tuesday’s close. Market fears of rising interest rates are currently weighing heavily on highly valued technology stocks. On Monday, Microsoft stocks slipped to a low since July 2021 at $ 276.

Microsoft shares rose 2.85 percent to $296.71 in trading on the NASDAQ.

Editorial office finanzen.net / FRANKFURT/NEW YORK (Dow Jones / dpa-AFX)

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