🏆 Microsoft Beats Expectations

What you need to know before the US markets open 🇺🇸

Jul 23, 2020

Hey Global Investor, here's what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Wednesday Close) 3,276.02 +18.72 (0.57%)

NASDAQ (Wednesday Close) 10,706.13 +25.76 (0.24%)

FTSE 100 (5 PM IST) 6246.41 +39.31 (0.63)

NIFTY 50 (Today's Close) 11,215.45 +82.85 (0.74%)

USDINR (5 PM IST) 74.63 (1 Year +8.08%)

Microsoft Beats Expectations

The second-most valuable public company in the US comfortably beat Wall Street’s expectations in its Q2 earnings report.

What Happened? On Wednesday, Microsoft reported record-breaking $38B in revenue and $11.2B in profits in Q2, or $1.46 per share, easily surpassing expectations of $1.34 per share. This performance caps a year in which, despite the Covid-19 pandemic, the company has raked in profits of $44.28B over sales of $143B, which are 13% and 14% higher, respectively, compared to last year’s numbers.

Given pandemic-enforced the “work from home” policies of corporate clients, Microsoft has seen an increased demand for its cloud computing software offerings, including Azure. The “Intelligent Cloud” division of the company alone generated $13.4 billion in sales, up 17% over last year. Similarly, revenue from the legacy PC operating system and software business grew 14% over last year to $12.9B.

The Productivity and Business Solution segment grew 6% year-over-year to $11.8B in revenue and saw a jump in Microsoft Teams user base from 44M to 75M.

On the flip side, Microsoft announced layoffs at LinkedIn as well as the shutting down of the videogame streaming platform Mixer, costing $450M.

These sobering developments won’t dampen Wall Street’s mood, which is banking on the leadership of CEO Satya Nadella, under whom, Microsoft’s share price has more than quintupled since 2014.

Market Reaction: Microsoft shares are up more than 34% so far this year, pushing Microsoft’s market cap past the $1.6T mark. After the earnings report, the stock dropped about 2% in after-market trading.

Microsoft Snapshot

MSFT $211.75 +3.00 (+1.44%)

Analyst Ratings (35 Analysts) BUY 89% HOLD 11% SELL 0%

Newsworthy 📰

Guilty as Charged: Twitter Admits Hackers Accessed DMs of Dozens of High Profile Accounts (TWTR -0.19%)
Clear Cut: Facebook tests a new Page design with a cleaner layout and no more ‘Like’ button (FB -0.78%)
Monumental Achievement: Tesla Reports Profit for Fourth Straight Quarter, Setting It Up to Join S&P 500 (TSLA +1.53%)
Adiós Amigo: Mixer Shuts Down Today (MSFT +1.44%)

Later Today 🕒

6.00 pm IST: Initial Jobless Claims (Regular State Program)
6.00 pm IST: Continuing Jobless Claims (Regular State Program)
6.00 pm IST: Continuing Jobless Claims (Federal & State, NSA)
7.30 pm IST: Leading Economic Indicators
Before Market Open: AT&T Inc Earnings
Before Market Open: Union Pacific Corp Earnings
After Market Close: Intel Inc. Earnings

Fun Fact of The Day 🌞

There are 18 Volcanoes in the US with the Potential to Erupt Again, All of Them in Alaska, Hawaii and the West Coast States.

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