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Microsoft’s earnings ride high on its cloud services

By Yashasvini on Jul 28, 2021 | 03:38 AM IST

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Microsoft’s shares fell almost 3% in extended trading on Tuesday after reporting its fiscal fourth-quarter earnings, following the company's year-to-date run of 30% that soared investors' expectations for the quarter.

In spite of the dip, Microsoft reported upbeat earnings as the demand for its cloud computing solutions has risen. The software and hardware company earned $2.17 per share topping analysts' estimate of $1.92 per share while revenue grew $46.15 billion as compared to $44.24 billion as expected by analysts.

Microsoft’s More Personal Computing segment, which features Windows, devices, gaming, and search advertising, generated $14.09 billion in revenue, up 9%.

Work-from-home culture has intensified the demand for cloud-based computing, proving beneficial to companies such as Microsoft, Amazon.com Inc, and Alphabet Inc.

Despite beating analysts' revenue estimates, the company’s revenue from device makers for Windows licenses in the quarter fell 3%. The license revenue associated with consumer PCs decelerated to 4% after growing 44% in the past quarter. 

These issues have recently been flagged by Dell and Hewlett Packard (HP). Even Microsoft-branded surface PCs witnessed a 20% decline.

The company attributed these issues to supply limitations. 

After Tuesday’s close, Microsoft's market capitalization currently stands at nearly $2.2 trillion. Some analysts believe that the stock may be overvalued, which has risen nearly 30% so far this year, compared with 18% for the overall S&P 500 Index.

(Inputs from CNBC)

Picture Credits: Reuters

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