• A short note on Microsoft earnings

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    #1991769

    I don’t dig into Microsoft earnings statements anymore. Paul Thurrott sums up the reason nicely: Microsoft is eager for investors to believe that it’s
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    • #1991783

      The only real news in a Microsoft earnings report will be when they miss estimates and the stock gets a beating. Until then, it is business as usual.

      --Joe

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      • #1992680

        Quarterly gross margins, gross revenues, and earnings per share and whatever the Wall Street Quants’ usual metrics state is what will be the most interesting information. And all that usual corporate creative accounting is just a shell game to hide things from the small investors.

        I’m more inclined to watch what the big institutional investors are doing as the big funds have all the high paid Quants looking things over but any realistic specifics are going to be behind some pretty costly pay walls. Some little bits of that information can leak out over time but that’s a visit to the local library and loads of daily reading if one lacks all the needed subscriptions to more than a few investment publications.

        So the cloud is the current golden cow for the technology market that’s really also the largest purchaser of large blocks of server CPUs, GPUs, and that AI whatnot accelerator market’s specialized offerings.

        I’d try and get a handle on any of MS’s new Server Only CPU/Other related cloud market processors/accelerators purchasing metrics on a quarter to quarter basis and that’s one metric that’s going to be more related to any cloud market share growth along with some leaked  analysis that filters out over time via the regular financial press sources that do not require expensive subscriptions.

        There is the largest cloud provider and all the similarly large competition that’s close in total market cap. But really it’s the cloud providers that are growing the fastest that should be of more interest to the equity investors and the cloud providers with the largest market share that have the highest earnings per share for those investors not as interested in equity growth.

        Microsoft is not the usual cloud provider what with MS’s history as an OS/Software business. But ever since MS promoted a cloud vice president to it’s CEO well that’s been the focus for that CEO. So I’d expect that’s a sore spot for Nadella  and MS will double down on the Obfuscation if that cloud market’s numbers are less than acceptable to the market analysts. But as long as MS’s revenues, margins, and earnings per share are sufficient MS’s BOD are not going to be too much concerned in the short term.

        If MS’s cloud ambitions are not playing out so well then maybe that will force MS to pay more attention its traditional markets and really a part of that overzealous push with Windows 10  and the forced PC/Laptop market cloud integration is turning more consumers away and that could be a part of the Cloud problem that MS is facing.

        Maybe MS’s BOD needs to tell Nadella to try and sell any and all remaining MS’s OSs to consumers and let the consumers choose 7, 8.1, or Windows 10. Maybe Nadella should take a look at hiring more QA/QC folks for Windows 10 and also sell extended security updates for 7 for any who are willing to pay.

        Now I’m very interested in seeing just how much of MS’s Cloud market revenues is related to Windows 10 on the consumer side and and how much of MS’s cloud market revenues  is related to actual business/enterprise OS cloud market services(VM/Containers/Etc and related hosting revenues).

    • #1991889

      Didn’t Thurrott mention that Windows earned more than Azure this past quarter. That’s not exactly a small lump, yet.

      GreatAndPowerfulTech

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      • #1991904

        Didn’t Thurrott mention that Windows earned more than Azure this past quarter. That’s not exactly a small lump, yet.

        $11.1 Billion.

        If that’s a “small lump of coal” I’m re-opening my anthracite mine.

        • #1992213

          That’s revenue, though, not profit.  Profit was ~11 billion on ~33 billion in revenue, consisting of ~11 billion for each of Microsoft’s three divisions, but I didn’t see any breakdowns of the individual divisions’ respective profits.

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          • #1992695

            That’s revenue, though, not profit.  Profit was ~11 billion on ~33 billion in revenue, consisting of ~11 billion for each of Microsoft’s three divisions, but I didn’t see any breakdowns of the individual divisions’ respective profits.

            Obviously.

            In order for $11.1B of sales to be a money-losing proposition, MS would have to be spending a lot more on development, testing, and quality improvement than they are.

            • #1992826

              I don’t think it is losing money, but there is no way for us to know which department was the most profitable from the information given.

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            • #1992855

              True – from this quoted press release, at least.

              From Microsoft’s Finance page, we see the following:

              MS1Q2020-1
              I know “operating income” <> “net income” but in this case, it’s a decent indicator of the share of profits generated by each division.

              You’ll note the cloud has slightly higher costs, likely due to the capital expenditures required.

              (Edited to add link to the finance page.)

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    • #1991902

      and that Windows is still a small lump of coal in an undifferentiated, increasingly forgotten corner.

      And so is the Surface project with stagnant sales for 7 years (~$1B revenue = 600,000 Surface devices, in a quarter. Profit, if any, never disclosed).

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