by winston » Thu Aug 04, 2016 9:00 pm
not vested
Tech Earnings Star No. 4: Microsoft
Cloud sales are also a big – and growing – business for the world leader in personal computer operating systems.
Yes, the Azure cloud unit from Microsoft Corp. (Nasdaq: MSFT) still ranks a distant second to AWS. But Mr. Softy is coming on strong here with a business that is adding sales and profit gains.
That’s great news for tech investors, because Azure more than makes up for weakness in Microsoft’s mobile and PC units. Azure is the chief reason why the company beat Wall Street forecasts for quarterly sales and profits.
To be sure, Microsoft posted an 8.8% decline in sales for its full fiscal year to $85.3 billion, the first time it’s done that since 2009. But I believe the strong results for the year’s final quarter show that the company is turning around nicely.
The company’s Intelligent Cloud segment, which includes its Azure on-demand computing services, rose 6.6% to $6.71 billion. But when you break out Azure on its own, you see that sales there grew 102% from the year-ago quarter.
And I see more synergies and growth ahead. For starters, Microsoft recently picked up business-networking site LinkedIn Corp. (NYSE: LNKD) for $26.2 billion.
LinkedIn is by definition a cloud-based business, so the move plays to a Microsoft core strength while putting in a new category. LinkedIn boasts some 400 million users around the world and will give Microsoft high-margin ad sales to round out its operations.
Microsoft’s comeback started around the time Satya Nadella took over as chief executive officer – and made the cloud and mobile his prime “targets.”
I first told you about Nadella and his plan back in May 2015. Since then, Microsoft is up 35.6%, while the S&P 500 has puttered along at a 9.8% growth rate.
Mark Zuckerberg, Satya Nadella, Larry Page, and Jeff Bezos. As these CEOs’ records show, investors can often follow great leaders to riches beyond their wildest dreams.
Source: Money Morning
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