Microsoft’s earnings beat expectations across the board, but the stock keeps slipping

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Microsoft Corp.’s earnings easily beat estimates on Tuesday, but shares still fell in after-hours trading after a series of record closing prices. Microsoft MSFT, + 0.16% on Tuesday reported third-quarter taxable earnings of $ 15.46 billion, or $ 2.03 per share, up from $ 1.40 per share a year ago, with earnings backed by a net income tax benefit of $ 620 million. Without that taxable profit, Microsoft would have reported earnings of $ 1.95 per share, still above estimates. Revenue for the quarter was $ 41.7 billion, compared to $ 33.06 billion in the same quarter last year.

Analysts on average expected earnings of $ 1.78 per share on sales of $ 41.04 billion, according to FactSet. The shares fell about 3.6% in after-hours trading after the report was released, after closing at an all-time high for the third consecutive session with a 0.2% daily gain. Microsoft shares were on track for their sixth consecutive positive month, which would be their strongest streak since an eight-month streak that ended in January 2020. Microsoft shares have been trading largely at or near highs. milestones for months amid strong gains for computer sales, collaboration software and cloud computing adoption during the COVID-19 pandemic. In the holiday season, Microsoft surpassed $ 40 billion in quarterly sales and $ 15 billion in quarterly profit for the first time, pushing the stock to a record high at the time; it repeated the performance in the first calendar quarter of 2021, although revenue fell short of the holiday quarter’s record sales. Microsoft’s cloud computing product Azure increased sales 50% in the first three months of the year, the company revealed. Microsoft does not provide raw figures for Azure performance, unlike rivals such as AMZN from Amazon.com Inc., + 0.25% from Amazon Web Services and GOOG from Alphabet Inc., -0.84% ​​from GOOGL, -0 , 82% from Google Cloud. The segment that includes Azure, which also includes sales of local servers and other companies, reported total revenue of $ 15.1 billion, up from $ 12.28 billion a year ago. Analysts were expecting an average “Smart Cloud” sales of $ 14.93 billion, according to FactSet. Microsoft’s “Productivity and Business Solutions” segment, which includes Office and other cloud software products, reported revenue of $ 13.6 billion, up from $ 11.74 billion a year earlier. Analysts were expecting an average sales of $ 13.49 billion, according to FactSet. In the “More Personal Computing” segment, which includes revenue from Windows, Xbox and Surface, Microsoft reported revenue of $ 13 billion, up from $ 11 billion a year ago. Analysts project an average revenue of $ 12.55 billion, FactSet reported. Analysts expect the hit experienced by some Microsoft products as companies move to a work-from-home environment will be replaced by those companies looking to restart plans for big changes to their overall business. “In many cases, we see companies accelerating their digital transformation (larger deals) and their cloud strategy with Microsoft from 6 to 12 months, as the prospects for a semi-remote workforce in the foreseeable future look here to stay and Redmond reaches his next stage. growth in the cloud, ”Wedbush analyst Dan Ives wrote in a preview of the earnings report last week. “More than a year after the pandemic, digital adoption curves are not slowing down. They are accelerating and it is just the beginning, ”Chief Executive Officer Satya Nadella said in Tuesday’s announcement. Microsoft did not provide guidance for its fiscal fourth quarter in the announcement and typically provides that information in its conference call. Executives have scheduled Tuesday’s conference call for 5:30 pm ET. On average, analysts were forecasting fiscal fourth-quarter earnings of $ 1.78 per share on sales of $ 42.98 billion. Microsoft shares have gained 50.9% in the last year, as the Dow Jones Industrial Average DJIA, + 0.01%, which counts Microsoft as a component, has risen 40.8% and the S&P index 500 SPX, -0.02% is up 45.6%. .