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Photograph by Denis Charlet/AFP via Getty Images
Microsoft
Shares rose late in trading on Wednesday after the tech giant’s latest results beat Wall Street estimates.
Microsoft (ticker: MSFT) reported second-quarter adjusted earnings per share of $1.51, beating the Wall Street consensus of $1.32. Revenue of $36.9 billion beat expectations of $35.7 billion.
“We innovate across all layers of our differentiated technology stack and lead in key age-old areas that are critical to our customers’ success,” Microsoft CEO Satya Nadella said in the earnings release.
Microsoft shares rose 3.1% to $173.20 in after-hours trading after the report.
Fiscal second-quarter sales in the company’s Azure cloud segment were up 62% year-over-year. Windows OEM Pro revenue increased 26% in the quarter due to strong demand for Windows 10.
Jonathan Neilson, Microsoft Investor Relations, said in a phone interview that the company does not expect Windows to continue to grow at its high double-digit growth rates of recent quarters. Neilson cited a temporary refresh cycle boost before the January 14, 2020 support expiration for Windows 7 and tougher comparisons in the future.
The company also said it returned $8.5 billion of capital to shareholders through buyouts and dividends during the second quarter.
Microsoft’s cloud traction is a key reason why its shares significantly outperformed the market in 2019. The stock rose 55% last year amid investor enthusiasm for the cloud business company’s Azure computing and its success in selling software subscriptions such as Office 365.
Wall Street analysts are optimistic that Microsoft will outperform again in 2020, with 91% having a buy or overweight rating on the company, according to FactSet.
Management has scheduled a conference call Wednesday at 5:30 p.m. EST to discuss the results with analysts and investors.
Write to Tae Kim at tae.kim@barrons.com
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