TheChek News Flow

Microsoft reports EPS in-line, revs in-line 

Reports Q2 (Dec) GAAP earnings of $0.71 per share, in-line with the Capital IQ Consensus of $0.71; revenues rose 8.0% year/year to $26.47 bln vs the $26.27 bln consensus. EPS include $0.06 in unfavorable items. 

• Devices and Consumer revenue grew 8% to $12.9 billion, with the following business highlights:
• • Surface revenue of $1.1 billion, up 24%, driven by Surface Pro 3 and accessories
  • Office 365 Home and Personal subscribers increased to over 9.2 million, up 30% sequentially over prior quarter
  • Search advertising revenue grew 23%, with Bing U.S. market share at 19.7%, up 150 basis points over prior year
  • Xbox console sales totaled 6.6 million units, with strong holiday season performance
  • Phone Hardware revenue of $2.3 billion, with 10.5 million Lumia units sold driven by growth in affordable smartphones
  • Windows OEM Pro revenue declined 13%; revenue was impacted by the business PC market and Pro mix returning to pre-Windows XP end of support levels and by new lower-priced licenses for devices sold to academic customers
  • Windows OEM non-Pro revenue declined 13%, with license growth from opening price point devices
• Commercial revenue grew 5% to $13.3 billion, with the following business highlights:
• • Commercial cloud revenue grew 114% driven by Office 365, Azure and Dynamic CRM Online, and is now on an annualized revenue run rate of $5.5 billion
  • Office Commercial products and services revenue declined 1%; transactional revenue was impacted by the continued transition to Office 365 and declines in commercial PCs following the XP refresh cycle
  • Server products and services revenue grew 9%, with double-digit growth of SQL Server and System Center
  • Windows volume licensing revenue increased by 3%, with annuity revenue growth partially offset by declining transactional revenue.
• Co also announced its intention to complete the existing $40 bln share repurchase authorization by Dec 31, 2016.