1 00:00:02,279 --> 00:00:05,680 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:05,720 --> 00:00:08,800 Speaker 1: dot com, the radio, plus mobile apps and on your radio. 3 00:00:09,080 --> 00:00:13,480 Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters. 4 00:00:13,480 --> 00:00:17,479 Speaker 1: I'm Charlie Pellett. Moments ago Microsoft report had profitence sales 5 00:00:17,520 --> 00:00:20,760 Speaker 1: that topped anile as estimates, lifted by an aggressive push 6 00:00:20,760 --> 00:00:25,599 Speaker 1: into Internet based software and services for businesses. Fiscal fourth 7 00:00:25,640 --> 00:00:29,080 Speaker 1: quarter revenue, including some adjustments, twenty two point six billion. 8 00:00:29,440 --> 00:00:32,440 Speaker 1: That compares with the average analy assessment for twenty two 9 00:00:32,680 --> 00:00:36,519 Speaker 1: point one billion dollars. The now climbing to a record 10 00:00:36,600 --> 00:00:39,559 Speaker 1: eight in a row, up twenty five points to eighteen thousand, 11 00:00:39,640 --> 00:00:42,200 Speaker 1: five hundred fifty nine, up one tenth of one percent, 12 00:00:42,720 --> 00:00:45,920 Speaker 1: SMP five hundred index down three to sixty three, a 13 00:00:46,000 --> 00:00:48,440 Speaker 1: drop there of point one percent. The old on the 14 00:00:48,479 --> 00:00:51,199 Speaker 1: tenure one point five five percent, up today by eight 15 00:00:51,240 --> 00:00:54,720 Speaker 1: thirty seconds, and gold up three fifty ounce to thirteen 16 00:00:54,800 --> 00:00:58,120 Speaker 1: thirty to a barrel UH announced uh it is hired 17 00:00:58,120 --> 00:01:01,520 Speaker 1: by three tenths of one percent. As for Barrel's crude 18 00:01:01,560 --> 00:01:04,880 Speaker 1: oil down sixty four cents forty four sixty for West 19 00:01:04,920 --> 00:01:08,039 Speaker 1: Texas Intermediate, a drop there of one point four percent. 20 00:01:08,400 --> 00:01:12,720 Speaker 1: I'm Charlie Pelt. That's a Bloomberg business flash. You're listening 21 00:01:12,760 --> 00:01:16,319 Speaker 1: to taking stock with bim Box and Kathleen Hayes on 22 00:01:16,440 --> 00:01:20,280 Speaker 1: Bloomberg Radio. Shares of Microsoft are higher right now by 23 00:01:20,319 --> 00:01:22,800 Speaker 1: more than one and a quarter percent. This comes after 24 00:01:22,840 --> 00:01:25,520 Speaker 1: the tech giant said that it earned sixty nine cents 25 00:01:25,520 --> 00:01:29,200 Speaker 1: to share on revenue of twenty two point six billion. 26 00:01:29,600 --> 00:01:32,400 Speaker 1: Analysts were just looking for the company to earn fifty 27 00:01:32,440 --> 00:01:35,160 Speaker 1: eight cents to share on revenue of twenty two point 28 00:01:35,319 --> 00:01:39,760 Speaker 1: one billion. Here to tell us more about Microsoft A 29 00:01:40,080 --> 00:01:42,840 Speaker 1: rag Rana. He is a senior analyst Software and I 30 00:01:43,040 --> 00:01:47,600 Speaker 1: T Services for Bloomberg Intelligence. Bloomberg Intelligence provides unique real 31 00:01:47,680 --> 00:01:50,960 Speaker 1: time research and context on a variety of industries and 32 00:01:51,040 --> 00:01:54,720 Speaker 1: all markets and government factors that affect business. Our terminal 33 00:01:54,760 --> 00:01:58,840 Speaker 1: customers can access this function at b I go on 34 00:01:58,960 --> 00:02:01,120 Speaker 1: a rock. Thank you very much for coming in. Tell 35 00:02:01,200 --> 00:02:04,280 Speaker 1: us a little bit about the details of Microsoft's report. 36 00:02:04,400 --> 00:02:08,240 Speaker 1: I'm thinking cloud my my on the right track here. Absolutely. 37 00:02:08,320 --> 00:02:10,880 Speaker 1: You know. Cloud Asure was up hunted in eight percent, 38 00:02:10,960 --> 00:02:14,079 Speaker 1: which is something we've been This is the cloud computing 39 00:02:14,080 --> 00:02:17,680 Speaker 1: division of Microsoft. It's the infrastructure as a service for 40 00:02:17,680 --> 00:02:21,040 Speaker 1: for Microsoft. We saw this yesterday also with vm D 41 00:02:21,160 --> 00:02:24,120 Speaker 1: and and you know IBM to certain effect that Brexit 42 00:02:24,240 --> 00:02:27,400 Speaker 1: vote has not impacted enterprise software spending at this point. 43 00:02:27,440 --> 00:02:30,880 Speaker 1: And with Microsoft today we see again that you know, 44 00:02:30,919 --> 00:02:34,640 Speaker 1: spending has been relatively healthy compared to the you know, 45 00:02:34,680 --> 00:02:39,720 Speaker 1: the huge volatility we saw across global markets. As far 46 00:02:39,760 --> 00:02:43,480 Speaker 1: as the cloud division goes, does this mean that all 47 00:02:43,720 --> 00:02:48,240 Speaker 1: cloud services are enjoying major popularity because I note that 48 00:02:48,280 --> 00:02:51,359 Speaker 1: whenever we look at the results of Amazon, we always 49 00:02:51,440 --> 00:02:54,360 Speaker 1: end up talking not just about retail but about those 50 00:02:54,400 --> 00:02:57,280 Speaker 1: cloud services. That has been the trend for the last 51 00:02:57,320 --> 00:02:59,360 Speaker 1: few quarters. And what we have seen, in fact in 52 00:02:59,400 --> 00:03:02,400 Speaker 1: the last two or three that has been an acceleration 53 00:03:02,760 --> 00:03:05,919 Speaker 1: in the adoption of cloud services, which we see across 54 00:03:05,960 --> 00:03:08,600 Speaker 1: not just with Amazon. We also see it in IBM 55 00:03:08,680 --> 00:03:12,720 Speaker 1: cloud division. Yesterday they reported articles cloud services they're also 56 00:03:12,760 --> 00:03:16,440 Speaker 1: doing very well. So as companies move their ID infrastructure 57 00:03:16,520 --> 00:03:21,840 Speaker 1: from legacy servers to to to to the cloud, you 58 00:03:21,880 --> 00:03:24,000 Speaker 1: will see a lot of these companies benefit from that. 59 00:03:24,400 --> 00:03:27,720 Speaker 1: Tell us about mobile technology and Microsoft, I have to 60 00:03:27,800 --> 00:03:31,640 Speaker 1: admit that I got all this information from reading your 61 00:03:31,639 --> 00:03:35,640 Speaker 1: Bloomberg Intelligence piece about Microsoft. Well, you know, as as 62 00:03:35,640 --> 00:03:38,080 Speaker 1: we know, they have d emphasized phones. So the phone 63 00:03:38,160 --> 00:03:41,320 Speaker 1: numbers were weak this quarter, as we expected. We are 64 00:03:41,320 --> 00:03:45,080 Speaker 1: seeing a lot of their productivity applications that run on 65 00:03:45,120 --> 00:03:47,840 Speaker 1: mobile devices they have done well and that's you know, 66 00:03:47,880 --> 00:03:49,880 Speaker 1: that has been a trend for the past several quarters. 67 00:03:50,560 --> 00:03:53,560 Speaker 1: Linked In the acquisition of Lincoln what what will that 68 00:03:53,640 --> 00:03:58,160 Speaker 1: do to Microsoft's disposition as a cloud company but also 69 00:03:58,280 --> 00:04:02,000 Speaker 1: as someone as you just described as uh, someone looking 70 00:04:02,000 --> 00:04:04,760 Speaker 1: to try to generate new revenue. See, Microsoft wants to 71 00:04:04,760 --> 00:04:06,400 Speaker 1: be relevant in the cloud world, and they have a 72 00:04:06,520 --> 00:04:08,880 Speaker 1: very good portfolio of services in the in the case 73 00:04:08,960 --> 00:04:12,560 Speaker 1: of infrastructure and platform. The software is a services where 74 00:04:12,600 --> 00:04:16,000 Speaker 1: they have lagged companies like Salesforce or work Day and 75 00:04:16,360 --> 00:04:18,880 Speaker 1: you know, we would we still need to see them 76 00:04:18,960 --> 00:04:21,360 Speaker 1: to talk about what new products are going to come 77 00:04:21,400 --> 00:04:24,440 Speaker 1: from this combination of Microsoft and LinkedIn, of whether it's 78 00:04:24,440 --> 00:04:27,039 Speaker 1: going to be something of a of a sales channel 79 00:04:27,160 --> 00:04:29,320 Speaker 1: or something of a you know, in a software that 80 00:04:29,480 --> 00:04:31,960 Speaker 1: is online based that can help them breach that gap. 81 00:04:32,640 --> 00:04:38,040 Speaker 1: Microsoft's cash balance, you note is over a hundred billion dollars. 82 00:04:38,520 --> 00:04:40,600 Speaker 1: They're going to spend some of that, well, they's just 83 00:04:40,640 --> 00:04:43,640 Speaker 1: spend someone LinkedIn. So it's right, is that but is 84 00:04:43,640 --> 00:04:45,719 Speaker 1: that likely. I mean, do they need to be buying 85 00:04:45,800 --> 00:04:49,719 Speaker 1: let's say, cloud computing services in order to add to 86 00:04:49,760 --> 00:04:54,000 Speaker 1: their portfolio. See, the cash balance is very strong for 87 00:04:54,040 --> 00:04:56,000 Speaker 1: a lot a lot of these tech companies. But but 88 00:04:56,040 --> 00:04:58,560 Speaker 1: at the same time, it's sparked outside the US, so 89 00:04:58,600 --> 00:05:01,039 Speaker 1: they might have to borrow money to in order to 90 00:05:01,080 --> 00:05:03,240 Speaker 1: buy something. But you know that has been the case 91 00:05:03,279 --> 00:05:05,520 Speaker 1: for a lot of these companies that if there is 92 00:05:06,320 --> 00:05:09,240 Speaker 1: a whole in in their portfolio, they can use it, 93 00:05:09,440 --> 00:05:13,440 Speaker 1: use this cache to to plug that. You've previously written 94 00:05:13,720 --> 00:05:18,520 Speaker 1: that Microsoft's server products grew just five in the fiscal 95 00:05:18,880 --> 00:05:22,279 Speaker 1: third quarter. You also mentioned that pressure on the personal 96 00:05:22,320 --> 00:05:27,200 Speaker 1: computer growth is affecting Microsoft's obviously software sales, even though 97 00:05:27,240 --> 00:05:30,200 Speaker 1: the surface tap is doing pretty well. Yeah, but both 98 00:05:30,240 --> 00:05:33,040 Speaker 1: those numbers were actually better than expected in this in 99 00:05:33,040 --> 00:05:35,919 Speaker 1: this particular quarter, right, server products and you know cloud 100 00:05:35,960 --> 00:05:38,080 Speaker 1: services were up eight percent, So that's you know that 101 00:05:38,200 --> 00:05:41,320 Speaker 1: turned the other way. PC shipments, according to I d 102 00:05:41,400 --> 00:05:43,560 Speaker 1: C in this quarter were not as bad as they 103 00:05:43,560 --> 00:05:47,200 Speaker 1: would they expecting it, which I'm suspecting must have helped 104 00:05:47,200 --> 00:05:50,760 Speaker 1: a lot portion of their you know, Windows, O, E, M, Business, etcetera. 105 00:05:51,040 --> 00:05:53,520 Speaker 1: And one of the comments I read was their their 106 00:05:53,640 --> 00:05:57,160 Speaker 1: mix was towards the higher end products, which is similar 107 00:05:57,200 --> 00:05:59,440 Speaker 1: to what you just mentioned the surface one, which is 108 00:05:59,480 --> 00:06:02,880 Speaker 1: what drought drove some of the revenue. Talking about higher 109 00:06:02,960 --> 00:06:07,920 Speaker 1: margin products, legacy products at Microsoft, don't they have higher 110 00:06:07,960 --> 00:06:11,680 Speaker 1: margins than the cloud business. Yes, but that's because they 111 00:06:11,680 --> 00:06:14,239 Speaker 1: are investing a lot more in cloud right now. So 112 00:06:14,240 --> 00:06:16,880 Speaker 1: so as as that gate scale, as you see the 113 00:06:17,400 --> 00:06:20,520 Speaker 1: benefits of that, you can expect margins of those cloud 114 00:06:21,000 --> 00:06:24,560 Speaker 1: products to improve this. But have at things like licensing 115 00:06:24,600 --> 00:06:28,920 Speaker 1: revenue for commercial PCs as well as server products. Do 116 00:06:28,960 --> 00:06:32,200 Speaker 1: we need to watch those as well? Yes, But at 117 00:06:32,200 --> 00:06:34,080 Speaker 1: the same time, you know, when you have an enterprise 118 00:06:34,080 --> 00:06:37,480 Speaker 1: license agreement or a newity business UM, you will see 119 00:06:37,520 --> 00:06:40,599 Speaker 1: some of that, you know, is not as volatile as 120 00:06:40,640 --> 00:06:43,080 Speaker 1: some of the transactional revenue, and which is when you know, 121 00:06:43,080 --> 00:06:45,760 Speaker 1: when we mentioned about the turbo products, they actually did 122 00:06:45,800 --> 00:06:50,040 Speaker 1: better than expected. And the Windows ten roll out, I 123 00:06:50,080 --> 00:06:52,920 Speaker 1: mean that continues to see what strong adoption. It has 124 00:06:52,960 --> 00:06:55,000 Speaker 1: seen some strong adoption, but I think that the PC 125 00:06:55,040 --> 00:06:57,520 Speaker 1: ship and data shows that maybe you know, it's the 126 00:06:57,560 --> 00:07:01,760 Speaker 1: Windows tent is helping PC ship makers PC makers to 127 00:07:02,279 --> 00:07:05,320 Speaker 1: UM you know, be able to get this refresh cycle 128 00:07:05,360 --> 00:07:07,159 Speaker 1: that has been lagging for a while. I want to 129 00:07:07,160 --> 00:07:09,520 Speaker 1: thank you very much for coming in and sharing your 130 00:07:09,560 --> 00:07:12,640 Speaker 1: thoughts of Microsoft shares right now are up more than 131 00:07:12,720 --> 00:07:16,360 Speaker 1: one and a half percent after reporting better than estimated 132 00:07:16,400 --> 00:07:20,200 Speaker 1: earnings and sales on a rug rona. Thank you very 133 00:07:20,240 --> 00:07:24,200 Speaker 1: much of Bloomberg Intelligence senior industry analysts. Of course, Bloomberg 134 00:07:24,240 --> 00:07:27,760 Speaker 1: Intelligence providing unique in real time research on a variety 135 00:07:27,760 --> 00:07:31,160 Speaker 1: of industries and markets, as well as government factors that 136 00:07:31,200 --> 00:07:35,440 Speaker 1: affect businesses. Our terminal customers can access this function at 137 00:07:35,600 --> 00:07:40,200 Speaker 1: b I Go. I'm pim Fox and this is Bloomberg 138 00:07:45,920 --> 00:07:49,080 Speaker 1: coming up. Bloomberg Laws brought to by Cone Resnick Accounting, 139 00:07:49,160 --> 00:07:53,280 Speaker 1: Tax Advisory, look Ahead, gain insight, imagine more the professionals 140 00:07:53,280 --> 00:07:56,200 Speaker 1: at Colne Resnic and help your business breakthrough. Find out 141 00:07:56,200 --> 00:08:00,200 Speaker 1: more at Cone Resnick dot com.