This post was originally published on this site
Microsoft Corp. shares pushed toward fresh record highs Wednesday afternoon, as the death of Windows 7 and continued growth in cloud computing pushed the company to an earnings beat.
Microsoft MSFT, +1.56% reported fiscal second-quarter net income of $11.65 billion, or $1.51 a share, on sales of $36.9 billion, up from earnings of $1.08 a share on revenue of $32.47 billion a year ago. Analysts on average expected earnings of $1.32 a share on sales of $35.67 billion, according to Factset.
Microsoft stock gained more than 2% in after-hours trading following the announcement, following a 1.6% increase in the regular session to $168.04, yet another all-time high for a company that was worth $1.28 trillion at the bell. Shares have gained 63.2% in the past 12 months, as the Dow Jones Industrial Average DJIA, +0.04% , which counts Microsoft as a component, rose 17.1% and the S&P 500 index SPX, -0.09% increased 24.1%.
Analysts and investors — who have sent Microsoft’s stock up 6.5% just since the calendar turned to 2020 — appeared to be expecting an earnings beat ahead of the numbers.
“We are expecting Nadella & Co. to post another solid beat across the board on both the top and bottom line as cloud strength on Azure and Office 365 continues to be the fuel in the tank, with strong field checks indicating the company could beat commercial cloud expectations by ~3%-4%,” Wedbush analyst Daniel Ives wrote in a preview earlier this week.
Microsoft’s rise in recent years has largely been credited to its emerging cloud-computing business, Azure, which is challenging Amazon.com Inc.’s AMZN, +0.26% dominant Amazon Web Services offering. In Wednesday’s report, Microsoft reported total cloud revenue — which includes Azure as well as server sales — of $11.9 billion, up from $9.38 billion a year ago, and said Azure grew by 62%. Analysts on average expected cloud revenue of $11.4 billion, according to FactSet.
Microsoft’s traditional personal-computer business reported revenue of $13.21 billion, up from $12.99 billion a year ago, ahead of the recent end of support for the Windows 7 operating system. Analysts on average were expecting $12.85 billion in PC revenue, according to FactSet.
Microsoft’s other segment, which focuses on software such as its eponymous Office suite, reported revenue of $11.83 billion, up from $10.1 billion a year ago. Analysts on average expected sales of $11.43 billion, according to FactSet.
Executives are scheduled to host a conference call at 5:30 p.m. Eastern time to discuss the results, and are expected to provide a forecast on that call.
