Microsoft Corporation (NASDAQ:MSFT) held its Financial Analyst Meeting last Thursday. Although the company didn’t provide as much detailed information as some were hoping, the company’s management did highlight a path toward growth. They also announced that they’ll be spending $6.5 billion on capital expenditures in 2014—far more than most were expecting. JPMorgan analyst John DiFucci and the rest of his team continue to remain Neutral on Microsoft and have set a $30 a share price target on the company’s stock.
Microsoft outlines the plan
According to their report, current Microsoft Corporation (NASDAQ:MSFT) CEO Steve Ballmer focused on the company’s financial strength, talent, past innovative successes and opportunities for growth. He hinted at a turnaround that could take four to five years and explained the company’s current near-term priorities.
He said first they will focus on winning in cloud services through Office 365 and Azure. Second, they will take steps to ensure that Windows PCs are still the primary productivity devices used by people. Third, they will focus on gaining mobile market share, and fourth, they will look toward innovating in high-value activities like improving the meeting experience.
The company said currently it is working on touch-first versions of its Office suite. It said versions for both Windows and other devices are in development.
Microsoft provides few guidance updates
The JPMorgan analysts said they were expecting “more color” around Microsoft Corporation (NASDAQ:MSFT)’s fiscal 2014 year revenue and / or operating margin expectations. However, they note that the most important update was guidance for $6.5 billion in capital expenditures. Previously they had modeled for $4.9 billion, and they believe few on Wall Street expected to see the company spend more than $6 billion during the 2014 fiscal year.
The company also unveiled its new financial reporting structure at last week’s meeting. This is part of the reorganization efforts that were announced earlier this year. Starting with the September quarter, Microsoft will group businesses with similar gross margin profiles together. Investors will see a Devices and Consumer segment and a Commercial segment. Within each of those segments, it will break out hardware and license businesses separately.