Microsoft Earnings: Upside Surprise Lifts MSFT Stock

by Tom Taulli | January 23, 2014 4:54 pm

Microsoft Earnings: Upside Surprise Lifts MSFT Stock

Microsoft (MSFT[1]) on Thursday afternoon issued Street-beating earnings for the fiscal second quarter, sending MSFT stock up solidly in after-hours trading.

MicrosoftNew185 Microsoft Earnings: Upside Surprise Lifts MSFT StockFor fiscal Q2, Microsoft earnings came to 78 cents per share on revenues of $24.52 billion. That beat Wall Street expectations for 68 cents per share on revenues of $23.68 billion, and MSFT stock was being bid up by roughly 3% as a result.

Behind the MSFT Q2 Report

It’s not often you get to say this, but Microsoft products were quite popular during the Christmas shopping season. MSFT sold 7.4 million Xbox units — 3.9 million units of its Xbox One console, as well as another 3.5 million units of its older-gen console, the Xbox 360.

And even the Surface table showed promise, with sales more than doubling on a sequential basis to $893 million.

Yet the biggest driver remains MSFT’s business software. For the most part, MSFT has made great strides in transitioning to cloud computing. The company has benefited from offerings like Office 365, Azure, and Dynamics CRM Online.

All told, the commercial segment saw revenues grow by 10% to $12.67B. And while MSFT does not break out its cloud numbers, the business more than doubled during the quarter.

However, MSFT stock investors can’t take away all roses from the Q2 Microsoft earnings report.

Microsoft continues to feel the pressure from erosion in the global PC market as illustrated by meager sales of the Windows OEM segment, which were off by 3%.

That means for MSFT, the emphasis going forward must continue to be figuring out and breaking new ground in mobile.

And as I discussed in a recent post[2], mobile should be one of the most important factors MSFT weighs in its ongoing CEO search.

Tom Taulli runs the InvestorPlace blog IPO Playbook[3]. He is also the author of High-Profit IPO Strategies[4]All About Commodities[5] and All About Short Selling[6]. Follow him on Twitter at @ttaulli[7]. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:
  1. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  2. discussed in a recent post: http://investorplace.com/2014/01/msft-stock-ceo-succession-killer/
  3. IPO Playbook: http://investorplace.com/ipo-playbook/
  4. High-Profit IPO Strategies: http://goo.gl/TXQsz
  5. All About Commodities: http://goo.gl/FfP8R
  6. All About Short Selling: http://goo.gl/t5Jzb
  7. @ttaulli: https://twitter.com/ttaulli

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