Is the End Near for Microsoft Corporation (MSFT)?

Is the End Near for Microsoft Corporation (NASDAQ:MSFT)?

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Microsoft Corporation (MSFT) Information Technology – Software | Reports July 19, After Market Closes

Key Takeaways

• The Estimize consensus is calling for earnings per share of 60 cents on $22.21 billion in revenue, 2 cents higher than Wall Street on the bottom line and $100 million on the top
• Microsoft’s recent acquisition of LinkedIn for $26 billion is expected to bolster Dynamics and Office 365
• The strong dollar and Brexit implications could have an impact on current and future earnings
• What are you expecting for MSFT? Get your estimate in here!

Microsoft is scheduled to report its fiscal Q4 earnings this Tuesday, after the market closes. Earnings will likely be an afterthought this quarter with the LinkedIn acquisition dominating a majority of the conversation. It is expected that CEO Satya Nadella will use the analyst call to further expand on how LinkedIn will integrate in its core business. The deal has left investor’s perplexed about the price and intent, creating some tension heading into earnings.

The Estimize consensus is calling for earnings per share of 60 cents on $22.21 billion in revenue, 2 cents higher than Wall Street on the bottom line and $100 million on the top. Compared to a year earlier this represents a 3% drop in earnings with sales expected to remain flat. Microsoft is seeing considerable downward revisions activity in the runup to its report, which is typically an indication of weak results. Microsoft is probably best known for its operating systems but that has been the worst performing part of its business. It’s no secret that PC sales are struggling as Apple continues to steal more market share and computers are no longer a necessity in the household. Microsoft has shifted its focus away from this struggling business to its rapidly growing cloud business. Along with Amazon and Google, Microsoft tops most lists as the leader of in cloud products. Microsoft cloud suite currently includes Office 365, Dynamics CRM and Azure, which all reported gains of over 5% last quarter.

Based on initial reports, LinkedIn is expected to fit seamlessly into its CRM and cloud platforms as means to undercut Salesforce. Microsoft recently launched Dynamics 365 platforms, bundling its CRM and ERP solutions into one new platform. Integrating LinkedIn’s functionality will help sales professionals using Dynamics to seamless access qualified leads and drive sales.

Another thing worth looking out for is the impact of strong dollar and any discussion on Brexit. Microsoft has a huge international presence, and gets around 7 – 8% of revenues from the UK alone. Unfavorable exchange rates caused by Brexit will certainly impact the bottom-line.
Do you think MSFT can beat estimates? There is still time to get your estimate in here!

Photo Credit: Thomas Hawk