The Year Wrapped Up For Microsoft (NASDAQ:MSFT)


Microsoft (NASDAQ:MSFT)’s first quarter results just glided in, topping analyst predictions. Its earnings per share fell by 13% to $0.54, whereas the revenues rose by 25% counting total to $23.2 billion. According to Thomas Reuters predictions the per share earnings was to be $0.49 and the revenue total at $22.02 billion. The Gross profit was up by 12% totaling to $14.93 billion whereas the operating income fell by 8% to $5.84 billion. The revenue generated by Microsoft (NASDAQ:MSFT)’s consumer and devices business unit was up by 47%. The sales of Windows phone, Surface, Xbox and consumer licensed software, all contributed to $10.96 billion in revenue. On the other hand Commercial revenue, which consisted to licensing of software and services, soared up by 10% totaling income to $12.28 billion. Overall the Microsoft (NASDAQ:MSFT) stock was up more than 33% as compared to last year. Let’s look closely into factors that contributed majorly to this success.

  1. Hardware Sales: Microsoft (NASDAQ:MSFT) investors aren’t very well versed about the business hardware and neither are they aware of its improving sales. These hardwares include Xbox consoles, Surface tablets and Windows Phones. In the past we have seen that Sony (NYSE:SNE) sold off double the amount in unit of PS4 as Microsoft (NASDAQ:MSFT)’s Xbox Ones. The Windows phone make up2.5% of all smartphones. Google (NASDAQ:GOOG) Androids make up 85% and Apple (NASDAQ:APPL) iPhones 12%. Similar is the story with the Surface line, it lost Microsoft (NASDAQ: MSFT) $1.7 billion as iPads and Android tablets play the field and are considered more popular.

Hence this time around when the figures revealed a rise in all the three products, the company was a bit taken back. Xbox sales rounded up to 2.4 million units up by 102%. Lumia sales were of 9.3 million with 5.7% increase which bought in $2.61 billion in terms of revenue. Lastly the Surface Pro 3 contributed in doubling the Surface line sales resulting in $908 million in revenue; number for subscribers for Office 365 Home and Personal also increased by 25%. A total of 5% increase was also seen in Office Commercial products and services. A new initiative that Mircosoft is taking is having its new products all coordinating with cloud. Those figures also rose by 128% year over year.

–          Watch the bottom line: In the midst of success the net income still fell by 13% year over year, rounding it up to $4.54 billion. This was a result of increased cost of revenue and operating expenses. Major discounts on hardware and software were offered throughout the quarter. Its top products like the Xbox, Lumia and Surface 2 model tablets were all sold off at discounted prices. But the company is hoping that once the new products are out they would make up for the losses.

–          Transition mode: The Company is also in transition mode hence another $500 million is to be incurred for restructuring throughout the year. Even though this reveals that the transition mode won’t be very smooth in terms of finances but Microsoft (NASDAQ: MSFT) it hoping it pays off in the long run.