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Microsoft’s Shares Surge on Strength of Cloud Business

Friday, October 21, 2016 8:24
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Microsoft is enjoying a five percent stock hike this morning, breaking a record it set nearly 20 years ago.

As of this morning, Microsoft’s stock hit $60.11, blowing the 1999 record of $58.72 out of the water.

The software firm’s solid first-quarter report that included $22.3 billion in revenue and earnings per share of $0.76 pleased investors, but it was the progress made by the company’s cloud division that really had Wall Street excited.

Satya Nadella

Satya Nadella

Revenue in Intelligent Cloud was up eight percent to $6.4 billion with Azure revenue spiking a whopping 116 percent, with compute usage more than doubling year-over-year.

Microsoft’s commercial cloud annualized revenue run rate has surpassed $13 billion, and the company is on track to hit its goal of $20 million in fiscal year 2018.

“Once enterprise customers choose one of our cloud services they continue to adopt more services,” CEO Satya Nadella said in an earnings call with analysts. “More than 60 percent of the Fortune 500 now have at least three of our cloud offerings, up 20 points year-over-year. And as with last quarter, we continue to grow our commercial annuity mix, which is now at 88 percent.”

Jack Gold, of J.Gold Associates, LLC, described Microsoft’s Azure cloud services as “a real alternative to many companies automatically selecting AWS by default.”

“The shift to online services like Office 365 is moving rapidly, and even more rapidly at the consumer space than I had expected,” he added. “Businesses are also moving towards online for Office. In the short-term, this means lower revenues for Microsoft as the total immediate income is less. But long term this is good for Microsoft as it has a recurring revenue stream. And it frees up capital spend in enterprises to invest in new areas like IoT, AI, app migration, etc.”

Microsoft returned $6.6 billion to shareholders in the form of share repurchases and dividends in the first quarter of fiscal year 2017. During the quarter, the company also announced an eight percent increase in its quarterly dividend to $0.39 per share, a new share repurchase program authorizing up to $40 billion in share repurchases, and reaffirmed it is on track to complete its current $40 billion share repurchase program by Dec. 31 of this year.


Jennifer Cowan is the Managing Editor for SiteProNews.

The post Microsoft’s Shares Surge on Strength of Cloud Business appeared first on SiteProNews.


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