LONDON, UK / ACCESSWIRE / July 21, 2016 / Active Wall St. announces its post-earnings coverage on Microsoft Corp. (NASDAQ: MSFT). The company reported Q4 FY16 financial results after markets closed on Tuesday, July 19, 2016. The tech giant beat estimates on both the top and bottom lines. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
For the period ending on June 30, 2016, Microsoft reported non-GAAP earnings of $0.69 per share as compared to earnings of $0.60 in the year ago period, thus topping analysts' estimate of $0.58 in earnings per share. The company reported revenue of $22.6 billion as compared to $22.18 billion in last year same quarter, clearing analysts' consensus estimate of $22.2 billion in revenue. Microsoft wrote down a $1.1 billion charge towards impairment, integration, and restructuring expenses.
"This past year was pivotal in both our own transformation and in partnering with our customers who are navigating their own digital transformations," Microsoft CEO Nadella said in a statement during the earnings announcement.
Flying on Cloud
The cloud computing business has been a major driver of growth over the last few years. Microsoft has been heavily investing resources to build the internal cloud infrastructure. With the recent results it appears that these efforts are paying off. Microsoft's cloud computing platform, Azure, reported a staggering 102% growth in Q4 FY16 on a y-o-y basis; this is slightly lower than Q3 FY16 growth of 120%. Microsoft stated that it expects to generate more than $12 billion in sales annually from Azure cloud unit, its highest ever. Sales from Microsoft's cloud division hit $6.7 billion in Q4 FY16, a 7% gain from Q4 FY15. Microsoft still trails Amazon.com's Amazon Web Services (AWS) in regards to purely cloud infrastructure revenue.
Phone and Windows Tumble
The astounding performance of Azure has helped Microsoft cushion the blow from a botched investment in smartphones and a slow PC market impacting its Windows licensing sales. Revenue in its Personal Computing division declined 4% and this was attributed to a 70% decline in revenue from the handset business on a y-o-y basis. Microsoft also wrote down a $1.1 billion charge related to the fallout from its purchase of Nokia and subsequent restructuring of the phone division. In July 2015, the company took a $7.6 billion charge for the Nokia deal. On 15 July, 2016, Microsoft announced that it will miss its goal to have Windows 10 running on one billion devices by 2018 attributed to slower-than-expected upgrades and adoption. While the phone business was a sore spot, there was a silver lining from Surface and Xbox. For Q4 FY16, Surface's revenue increased 9% over the year ago period, and Xbox Live usage was up 33%.
Share Repurchase and Guidance
During Q4 FY16, Microsoft returned $6.4 billion to shareholders in the form of share repurchases and dividends.
Stock Performance
Following the release of its earnings report, the stock was up 4.24% at $55.34 in the after-hours trading session on Tuesday, July 19, 2016.
At the close on Wednesday, July 20, 2016, shares of Microsoft finished at $55.91, up 5.31%. A total volume of 89.45 million shares was traded at the end of the day, which was higher than the 3-month average volume of 32.97 million shares. Microsoft's stock price has gained 11.66% in the past one month.
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