Breakdown of the latest developments on the global exchanges
Jul 23, 2020, 9:35 AM GMT

Microsoft Beats Estimates in the Fourth Quarter

Satya Nadella, CEO of Microsoft

The tech giant reported quarterly earnings yesterday after the market close for the three months ending June 2020. The findings of Microsoft’s earnings report surpassed the initial expectations, which is mostly due to the robust performance of the company’s cloud segment.

Diluted Earnings Per Share were reported at $1.46 vs $1.37 expected. Revenue was at $38.0 billion, which measures a considerable increase of 13 per cent from the same period last year. Meanwhile, operating income was measured at $13.4 billion, up 8 per cent on yearly basis.

The Chief Executive Officer of Microsoft Satya Nadella commented on the solid quarterly performance by praising the company’s ‘digital capability’ as the primary reason for Microsoft’s ability to survive and thrive under the conditions of the coronavirus crisis.

“The last five months have made it clear that tech intensity is the key to business resilience. Organizations that build their own digital capability will recover faster and emerge from this crisis stronger. We are the only company with an integrated, modern technology stack – powered by cloud and AI and underpinned by security and compliance – to help every organization transform and reimagine how they meet customer needs.”

His comments closely resembled the remarks of Christine Lagarde from yesterday, who said that industries would need to digitalise in order to become more resilient in the future.

As was argued in our analysis of Microsoft’s stock from yesterday, traders and investors are mostly concerned with Microsoft’s commercial cloud segment, which has transformed into a benchmark for the company against which each quarterly performance is measured.

Microsoft’s Q4 data revealed that commercial cloud” has surpassed $50 billion in annual revenue for the first time this year,” said Amy Hood, Executive Vice President and CFO of Microsoft. “This quarter our Commercial bookings were better than expected, growing 12 per cent year-over-year”.

This is the primary factor against which stakeholders and traders are likely to weigh in on how Microsoft is managing to weather the coronavirus fallout. Based on the recorded numbers, investors’ trust in the company’s ability to continue growing despite these volatile times is likely to persist.

Microsoft’s shares dipped in after-hours trading by 2.3 per cent to 206.90 despite the positive report.

Nevertheless, this is likely to be a temporary disruption rather than a major trend reversal, and MSFT is expected to attempt breaking out above the historical resistance level at 216.60 in the near future.

Microsoft 4H Price Chart