Microsoft Corporation (NASDAQ:MSFT) announced that revenues for the quarter ended March 31, 2015 grew to $21.7 billion. Gross margin, operating income, and diluted earnings per share (“EPS”) for the quarter were $14.6 billion, $6.6 billion, and $0.61 per share, respectively.
These financial results include $190 million of integration and restructuring expenses, or a $0.01 per share negative impact, related to Microsoft’s restructuring plan announced in July 2014 and the ongoing integration of the Nokia Devices and Services (“NDS”) business.
During the quarter, Microsoft returned $7.5 billion to shareholders in the form of share repurchases and dividends.
The following table notes the impact of the integration and restructuring expenses on the company’s financial performance (“Noted Items”). This financial information is provided to aid investors in better understanding the company’s performance. All growth comparisons relate to the corresponding period in the last fiscal year.
The strengthening of the U.S. dollar compared to foreign currencies had a significant impact on results in the quarter. Excluding the effect of foreign exchange rate changes on the GAAP amounts, on a constant currency basis, revenue and gross margin would have grown 9% and 4%, respectively, and operating income and EPS would have declined 4% and 7%, respectively.
“Customers continue to choose Microsoft to transform their business and as a result we saw incredible growth across our cloud services this quarter,” said Satya Nadella, chief executive officer at Microsoft. “Next week at Build we’re excited to share more about how we’re empowering every individual and organization on the planet to achieve more with the next generation of our platforms.”
“We executed with strong operational and financial discipline again this quarter, and are seeing positive impact from our investments in key growth areas,” said Amy Hood, chief financial officer at Microsoft. “We remain focused on maximizing shareholder value and again increased our overall return of capital to shareholders.”
Devices and Consumer revenue grew 8% (up 11% in constant currency) to $9.0 billion, with the following business highlights:
- Office 365 Consumer subscribers increased to over 12.4 million, up 35% sequentially
- Windows OEM Pro revenue declined 19%, as Pro mix returned to pre-Windows XP end-of-support levels and the business PC market declined
- Windows OEM non-Pro revenue declined 26%, primarily due to channel inventory drawdown and ongoing mix shift to opening price point devices
- Search advertising revenue grew 21% (up 24% in constant currency), with Bing U.S. market share at 20.1%, up 150 basis points over prior year
- Xbox Live usage grew over 30%, driven by increased users and deeper user engagement
- Surface revenue of $713 million, up 44% (up 53% in constant currency) driven by Surface Pro 3
- Phone Hardware revenue of $1.4 billion, with 8.6 million Lumia units sold
Commercial revenue grew 5% (up 7% in constant currency) to $12.8 billion, with the following business highlights:
- Commercial cloud revenue grew 106% (up 111% in constant currency) driven by Office 365, Azure and Dynamics CRM Online, and is now on an annualized revenue run rate of $6.3 billion
- Server products and services revenue grew 12% (up 16% in constant currency), with premium versions of Windows Server, System Center Server and SQL Server together growing 25%
- Office Commercial products and services revenue declined 2% (up 1% in constant currency); transactional revenue was impacted by the continued transition to Office 365 and declines in business PC sales following the XP refresh cycle
- Windows volume licensing revenue declined 2% (up 1% in constant currency), with transactional revenue declining following the XP refresh cycle partially offset by annuity revenue growth
“We remain focused on strong execution from our sales teams. Around the world we’re seeing high interest in deployment of our cloud and server products, as well as participation in the enterprise early adopter program for Windows 10,” said Kevin Turner, chief operating officer at Microsoft. (Original Source)
Shares of Microsoft closed today at $44.86, up 1.875 or 4.36%. MSFT has a 1-year high of $50.05 and a 1-year low of $38.51. The stock’s 50-day moving average is $41.90 and its 200-day moving average is $44.60.
On the ratings front, Microsoft has been the subject of a number of recent research reports. In a report released today, Morgan Stanley analyst Keith Weiss maintained a Hold rating on MSFT, without suggesting a price target. Separately, CLSA’s Ed Maguire today reiterated a Buy rating on the stock.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Keith Weiss and Ed Maguire have a total average return of 23.4% and 4.7% respectively. Weiss has a success rate of 76.5% and is ranked #165 out of 3577 analysts, while Maguire has a success rate of 50.0% and is ranked #1347.
In total, 3 research analysts have rated the stock with a Sell rating, 8 research analysts have assigned a Hold rating and 12 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $42.89 which is 10.2% above where the stock opened today.