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Microsoft (MSFT $43.40 -3.61) shares are trading lower by 7% after the company reproted second quarter GAAP EPS of $0.71 which is line with estimates, while revenues rose 8% to $26.47 billion which is roughly in line with estimates. EPS include $0.06 in unfavorable items ($0.02 from restructuring/integration and $0.04 from an IRS tax adjustment).

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.

On the conference call, the company provided third quarter revenue guidance of $20.6-21.4 billion which is below estimates. Guidance is based on co's current view of FX rates; should US dollar continue to strengthen co would see a negative impact to earnings, revenue, and the balance sheet; co sees a 4 point headwind due to FX; co expects gross margin to be lower of the next couple of quarters Devices and consumer In licensing revs expected between $3.4-3.6 bln, In computing and gaming revs expected between $1.5-1.7 bln In phone hardware revs are expected to be $1.4-1.5 bln. Other revs expected between ~$2 bln Commercial Co sees commercial licensing revs of $9.7-9.9 bln Co sees commercial other revs of $2.6-2.7 bln.

MSFT shares are trading higher by 27% over the last 12 months. If today's downtrend continues look for support near the $42.50-43.00 area
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EXCLUSIVE-Blackstone sets up new credit fund to seek undervalued oil and gas assets - RTRS

NEW YORK, Jan 27 (Reuters) - Blackstone Group LP BX.N, the world's largest alternative asset manager, is raising its first energy-focused credit fund, according to people familiar with the matter, the latest sign that private equity firms are seeing investment opportunities among distressed energy assets.

The move indicates Blackstone is betting that the bonds of some exploration and production companies that rode North America's oil and natural gas boom are now undervalued, or could be in the near future, following the plunge in crude oil prices. (Full Story)

Not only has the oil price collapse put acute pressure on energy companies with weak balance sheets or high production costs, it has also hurt sales for related services companies that sell everything from sand to drilling rigs to temporary housing. (Full Story)

GSO Capital Partners LP, Blackstone's credit investment arm, has approached many of its existing investors to quickly raise between $500 million and $1 billion to invest in traded debt securities in the energy sector, the sources said.

A Blackstone spokesman declined to comment. The sources asked not to be identified because the fundraising is confidential.

GSO’s new corporate energy credit fund is just the latest in a series of such funds being raised in the aftermath of oil prices falling more than 50 percent since the middle of last year. Apollo Global Management LLC APO.N, for example, disclosed in a regulatory filing last week that it was raising a new fund to invest in less liquid or illiquid credit products in energy businesses.

POTENTIAL FOR LARGE RETURNS

Unlike Apollo's fund, though, the new GSO fund will invest primarily in the liquid corporate energy credit markets. This means it will seek to buy the traded debt of energy companies for the most part, rather than lend to them directly.

"If you buy something that has a 12 percent yield to maturity, and the maturity is for ten years, but oil prices recover in two or three years, you will make a 25 percent rate of return over a two- or three-year time frame," one of the sources said.

One strategy that GSO's new energy credit fund will deploy is to invest in companies, some private equity-owned, whose bonds are trading at distressed levels. This could put GSO in a position to take an equity stake through the restructuring of a company’s debt and benefit from any recovery in its valuation.

"It's going to be a very quick market dislocation and it may be relatively short-lived. You have to have enough experience in this sector to time it effectively," said Andrea Kramer, a managing director at Hamilton Lane Advisors LLC, which has over $220 billion in assets under management and supervision.

The new GSO credit fund will be looking to balance its portfolio by investing in lower-risk, lower-return debt securities, according to the one source.

Buyout firms raised $17.5 billion globally in 2014 for private equity funds dedicated to natural resources, according to market research firm Preqin. Blackstone has just finished raising its second energy-focused buyout fund, amassing $4.5 billion. The New York-based firm began raising that fund in the first half of 2014, before oil prices started to slide precipitously in the second half.

Leveraged buyouts of energy companies, however, have been few and far between, because lower valuations have made owners reluctant to sell. Any decreases in exploration activity as a result of the lower oil prices also means there could be fewer opportunities for private equity firms wanting to provide seed capital to new oil and gas companies.

GSO already has a dedicated energy team that makes investments in the sector, using capital from general credit funds. Earlier this month, for example, GSO's rescue-lending fund and related vehicles agreed to commit up to $500 million for five years to fund the drilling program of oil and natural gas exploration company LINN Energy LLC LINE.O. (Full Story)

GSO, together with Franklin Square Capital Partners, also manages FS Energy & Power Fund, a business development company that invests in the debt and equity securities of private U.S. energy and power companies

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Alexis Tsipras was trying to form his first cabinet on Monday night after being sworn in as prime minister following his agreement with Independent Greeks leader Panos Kammenos to form a coalition government.