Microsoft Corporation (NASDAQ:MSFT) Gets Analysts Talking

Denver, CO, 10/28/2013 (Avauncer.com) – Microsoft Corporation (NASDAQ:MSFT)’s quarterly results surpassed market expectations. The company seems to have put behind the troubles, at least for now with Surface and Windows 8.1.  The main summary is as under:

• Revenue growth of 16% over 1Q13 – revenues was $18.5 billion in 1Q2014 against $16 billion in 1Q2013.
• Growth of 17% in diluted EPS – Diluted EPS grew from $0.53 in 1Q2013 to $0.62 in 1Q2014.
• Growth of 13% in Gross Margin- The gross margins grew from $11.8 billion for the same period last year to $13.4 billion for this quarter.
• Operating income was also higher at $6.3 billion against $5.3 billion for 1Q2013. This represents an increase of 19%.
• Net Income increased by 17% from $4.5 billion to $5.2 billion for this quarter.
• Both units –Commercial, and Device and Consumer showed growth.
  • The Commercial unit posted a growth of 10% in revenues as well as gross margins.  Licensing revenues contributed $9.6 billion to the overall revenues, rising by 7%. Commercial cloud grew by 103%. Cloud applications have a huge potential as companies are adopting this platform at a tremendous pace.
  • Device and Consumer (D&C) hardware revenues increased by 37% to $401 million. Higher sales of Surface tablets (contributing $400 million) also lead to higher cost of revenues to $643 million. Surface tablet sales doubled but higher costs on inventory built-up had to be incurred for the planned rollout in October. OEM Pro revenues increased by 6%, but there was a decrease by 22% in non-Pro revenues.

With Microsoft having bagged Nokia’s smartphone business, analysts will be looking at how Microsoft is able to monetize the investment. The company has been a late entrant in this segment and has a lot of catching up to do. Microsoft is also sitting on a big pile of cash. About 22% of its current valuation is in the form of cash or cash equivalents totaling $80.7 billion. Such a huge amount lying idle does not make sense, the company should look at other acquisitions aggressively else investors will be asking for a pie of this amount by way of a share buyback.

The markets reacted very favorably to these results, the share prices increased by 5.96% to touch $35.73 at the close of trading on October 25, 2013.

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