Q4 results: Microsoft heading in the right direction

Microsoft reported fiscal Q4 earnings results yesterday. Yous can read the WPCentral recap of the numbers here. Overall the financial functioning was decent, and Wall Street still seems to capeesh the work that Microsoft CEO Satya Nadella is doing to restructure the company for a successful future in cloud and mobile computing.

I've often talked about Microsoft as a turnaround story, and before I swoop into my thoughts on the quarter (and the visitor) let me just explain this a bit. Microsoft is undergoing pregnant change. They are moving from a desktop-oriented OS and software company to a mobile and cloud computing company that generally serves enterprise customers with productivity solutions. Some folks exercise not like the apply of the word "turnaround" to depict what'southward happening, simply I call back it is appropriate still. Usually a turnaround is attempted once information technology is clearly that the business is failing. Microsoft has been very successful and isn't failing. However, information technology is also obvious that if they stayed on the erstwhile path much longer they would fail. So whether y'all adopt to call it a "massive change in management" (or annihilation else) instead of "turnaround," be my guest. I am not going to argue about a label.

Microsoft posted $23.iv billion in revenue for the quarter. Because of the Nokia integration about two months of Nokia revenues are lumped in hither, or $two billion. If we adjust for this Microsoft still posted 10% year over year acquirement growth, which is quite strong.

Earnings per share (EPS) were $0.55, just the Nokia business injure them by $0.08 in the quarter meaning that core Microsoft earnings were really $0.63 per share. Analysts were expecting $0.threescore, and having been an analyst for a long fourth dimension I estimate nigh analysts did non incorporate an estimated loss from Nokia in these numbers, so I remember nosotros can reasonably say that Microsoft posted stronger than expected earnings.

In keeping with the major shift away from desktop and towards cloud/mobile, Microsoft was very keen to share the 147% year over year growth they posted in "commercial cloud," which is by and large Azure and Office 365. They said revenue is at present at a run rate of over $four.4 billion which ways quarterly acquirement was about $1.ane billion or nigh 5% of the entire company's acquirement. Considering the growth rate and the size of this revenue base of operations equally of today, I think information technology holds a lot of promise for Microsoft in the coming years. We are inbound a earth of software as a service (SaaS) and I think customers are becoming quite accepting of the idea they'll pay a recurring acquirement for productivity software such as Part 365. In the long run, this SaaS works out amend for Microsoft, and while customers spend more money they never have to worry about software installation or maintenance.

The Server and Cloud segmentation, which houses the to a higher place-referenced "commercial cloud" stuff posted a total of $13.five billion in revenue, or 58% of Microsoft'due south total. That is upwards 11% year over twelvemonth.

Looking at the phone concern, they sold 5.8 million Lumia phones in the quarter but call back this only accounts for a partial quarter under Microsoft'southward ownership. We can estimate that twelvemonth over yr Lumia growth was probably closer to 20% instead of the decline that the unadjusted numbers advise. Microsoft was very clear that the Lumia growth is coming from the Lumia 52x/62x series phones, and I am happy to see they've finally embraced (successfully) the depression stop of the marketplace. There is a lot of book to capture here, and Microsoft is making steady progress. That said when an entire operating system has less than ten meg smartphones sold per quarter it is not making the kind of progress required to become anywhere close to narrowing the gap between the tiptop two players (Apple and Google) and #3 (Microsoft ).

The 30 meg non-Lumia phones sold in the quarter too remind u.s.a. why the acquired Nokia division is taking the brunt of the job cuts recently appear. Yes it is unfortunate, but information technology is also very clear (when running a business) that feature phones take no place inside of Microsoft. As a reminder, when Microsoft cuts 18,000 jobs in the side by side few quarters most five,500 (a minority of the total) are core Microsoft folks. Also proceed in listen that in any given yr Microsoft probably sees nearly viii,000 people resign, and so they should be able to attain much of the not-Nokia cuts via normal compunction.

All things considered it looks to me like Microsoft is on pretty solid footing. They are making smart choices by consolidating teams to avoid duplication (OneDrive vs. OnDrive for Business, Skype vs. Lync, Commutation vs. Outlook). They expect operating costs to autumn in 2022 despite seeing revenue rise. They are the clear leader in part productivity software, and they are using this position successfully to monetize the growth of other mobile platforms which hateful they practice not need to win the mobile Bone state of war.

Financially, the stock trades at about $45 and analysts effigy they'll written report $iii.15 in EPS next year. That puts the stock at a forwards price to earnings multiple of 14, which also happens to be correct in line with Apple tree. This is non an expensive stock, nor does it catch me as particularly risky.

For those of you lot who spend time looking at tech stocks what's your take? Leaving you lot own personal views of the products aside, which stock would y'all rather own at a 14 P/E multiple? Microsoft or Apple? Microsoft already has the enterprise penetration that Apple tree is after. However, Apple has the kind of mobile market share that Microsoft would dear.

(Chris Umiastowski is a contributing fiscal author to the Mobile Nations network. You can see the residue of his posts here atAndroidCentral, iMore and CrackBerry. )

This huge Xbox 'Quick Resume' update will give gamers more control

Xbox Insiders Update

This huge Xbox 'Quick Resume' update will requite gamers more control

Microsoft is adding a new feature to Xbox consoles, assuasive yous to permanently shop up to ii games in a Quick Resume state at all times. The characteristic is heading out first to Xbox Insiders in the Alpha testing ring before hitting the full general public.