MSFT looking pretty good its true. Here is an extensive article just posted in IBD on the company.
<<Microsoft Meets Profit Views, But Shares Slip
By PATRICK SEITZ, INVESTOR'S BUSINESS DAILY
Posted 10/20/2011 06:29 PM ET
Microsoft ( MSFT) shares slipped in after-hours trading Thursday after the company reported in-line earnings on higher-than-expected sales for its fiscal first quarter.
Microsoft said it earned 68 cents a share, up 10% from the year-earlier quarter, matching Wall Street's target. Sales for the quarter ended Sept. 30 rose 7% to $17.37 billion, besting the $17.24 billion forecast by analysts.
"We started fiscal year 2012 with good momentum," Microsoft Chief Financial Officer Peter Klein said on a conference call with analysts. "We have great products in market, customer satisfaction is high, and we have important strategic investments and alliances that position us for long-term growth."
Office 2010 continues to sell well, 16 months after its release, Klein said. "Despite the best efforts of competitors, Office remains the overwhelming choice for productivity," he said.
And Microsoft's Internet-based Office product, called Office 365, has "surpassed our expectations," he said. "Businesses around the world, and of all sizes, are making the commitment to Microsoft's cloud services."
Sales for Microsoft's business software unit, which includes Office, rose 8% to $5.62 billion.
Server Unit Led Way
But of the company's three big divisions, Microsoft's server and tools unit posted the biggest growth. It recorded sales of $4.25 billion, up 10%. Sales of its server-based productivity software, including Lync, SharePoint and Exchange, grew at double-digits, and the Dynamics business grew 17%.
But Microsoft's flagship Windows operating system unit was a laggard. Its sales rose less than 2%, to $4.87 billion.
"It's widely known that consumer PC sales are weak and a lot of the PC growth is coming from emerging markets where piracy rates are very high and Microsoft doesn't get paid," said Sid Parakh, an analyst with McAdams Wright Ragen.
On the plus side, the company continues to show solid growth in selling long-term licenses to businesses and other enterprises, which shows customer interest in Microsoft's current and near-term products, Parakh says.
Microsoft did not provide guidance for the current quarter. Analysts polled by Thomson Reuters expect Microsoft to earn 83 cents a share, up 8%, on sales of $21.18 billion, up 6%.
Microsoft shares were down a fraction in after-hours trading, after falling a fraction in the regular session, to 27.04.
Meanwhile, speculation that Microsoft might take another try at purchasing Web portal Yahoo ( YHOO) picked up this week. The Yahoo board has been soliciting bids from interested buyers as it considers its strategic alternatives.
In February 2008, Microsoft offered to buy Yahoo for $44.6 billion. But Yahoo rejected that offer and a sweetened bid in May 2008 for $47.5 billion. Yahoo now has a market valuation of $20.5 billion. Speaking at a tech conference on Tuesday, Microsoft CEO Steve Ballmer said he was "lucky" Yahoo spurned his offers, made just before the financial market crisis.
Microsoft remains committed to its money-losing Internet businesses, including Bing and MSN. For the quarter, its online services division lost $494 million on sales of $625 million.
"The search and advertising business seems like something they're going to continue to invest in whether their second go-round with Yahoo works out or not," said Allan Krans, an analyst with Technology Business Research.
The next big milestone will be the delivery of Windows 8 for PCs and tablets, Krans says. Enterprise customers are looking for Microsoft to deliver business-ready mobile devices, he says. Windows 8 is due out next year.
Microsoft is making progress in developing mobile device software, CFO Klein said on the conference call.
"With Nokia ( NOK), Samsung and other devices coming to market, we are well-positioned to become the third mobile ecosystem" behind Google's ( GOOG) Android and Apple's ( AAPL) iOS products, he said.
Microsoft's entertainment and devices division, which includes Xbox video games and Windows smartphones, generated sales of $1.96 billion in the quarter, up 9% from a year ago.
investors.com |
