Microsoft hits $1 trillion in market cap after strong earnings

Microsoft 3Q19 revenue up 14% on the back of strong cloud and, uh, Windows? ars_ab.settitle(1495761);

Microsoft 3Q19 revenue up 14% on the back of strong cloud and, uh, Windows? ars_ab.settitle(1495761);

Microsoft added that its gross margin, which is the percentage of revenue left over after accounting for the costs of its products and services sold, came to 66.7%, up from 65.4% a year ago. In the final minutes of trading on Wednesday, Microsoft shares hit $125.07, an increase of 34% in the last 12 months.

"Leading organizations of every size in every industry trust the Microsoft cloud".

Microsoft is now locked into a fierce battle with Amazon Web Services to win a Pentagon cloud contract worth up to $10 billion (£7.7bn). Azure itself drove a 73% increase in revenue in the company's fiscal third quarter, a significant jump though a bit smaller than the 76% year-over-year increase in the previous quarter.

A big performer was Microsoft's Intelligent Cloud business, which includes Azure.

Microsoft passed $1 trillion in market value this week off the strength of an earnings report that showed stronger than expected sales and profits, making it only the third company to ever do so after Apple and Amazon. Besides, Microsoft's earnings per share had been $1.14 versus an average estimation of $1, while its net income had been lifted to $8.81 billion or $1.15 per share from $7.42 billion from a year earlier.

Despite a generally lacklustre PC market, Microsoft's best-known product, Windows, increased its OEM revenue by 9% as its division known as More Personal Computing increased its revenue by US$10.7 billion, a rise of 8%.

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Still, Azure will bring in sales of US$13.5 billion in the current fiscal year, with an overall growth rate of 75 per cent, he estimated.

If Microsoft's after-hours stock price holds above $130, it will open trading on Thursday as a trillion-dollar company.

Microsoft tops tech rivals such as Amazon in market capitalisation on some days despite having less revenue, partly because most of its sales are to businesses, which tend to be steadier clients than consumers.

LinkedIn saw a 27% revenue increase and Surface devices grew 21% year-over-year.

Meanwhile, Microsoft yielded 10.2 billion dollars from Productivity and Business Processes, including its Office 365 commercial suites, up 12 percent over the same period of 2018. All three of Microsoft's divisions - hardware, software, and cloud and enterprise services - are pulling their weight.

Microsoft said in its guidance for the fourth quarter that it expects revenue in the range of $32.2 billion to $32.9 billion, which is more or less in line with Wall Street's consensus of $32.6 billion.

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