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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.
Speaker 1: I'm Charlie Pellett. Moments ago Microsoft report had profitence sales
Speaker 1: that topped anile as estimates, lifted by an aggressive push
Speaker 1: into Internet based software and services for businesses. Fiscal fourth
Speaker 1: quarter revenue, including some adjustments, twenty two point six billion.
Speaker 1: That compares with the average analy assessment for twenty two
Speaker 1: point one billion dollars. The now climbing to a record
Speaker 1: eight in a row, up twenty five points to eighteen thousand,
Speaker 1: five hundred fifty nine, up one tenth of one percent,
Speaker 1: SMP five hundred index down three to sixty three, a
Speaker 1: drop there of point one percent. The old on the
Speaker 1: tenure one point five five percent, up today by eight
Speaker 1: thirty seconds, and gold up three fifty ounce to thirteen
Speaker 1: thirty to a barrel UH announced uh it is hired
Speaker 1: by three tenths of one percent. As for Barrel's crude
Speaker 1: oil down sixty four cents forty four sixty for West
Speaker 1: Texas Intermediate, a drop there of one point four percent.
Speaker 1: I'm Charlie Pelt. That's a Bloomberg business flash. You're listening
Speaker 1: to taking stock with bim Box and Kathleen Hayes on
Speaker 1: Bloomberg Radio. Shares of Microsoft are higher right now by
Speaker 1: more than one and a quarter percent. This comes after
Speaker 1: the tech giant said that it earned sixty nine cents
Speaker 1: to share on revenue of twenty two point six billion.
Speaker 1: Analysts were just looking for the company to earn fifty
Speaker 1: eight cents to share on revenue of twenty two point
Speaker 1: one billion. Here to tell us more about Microsoft A
Speaker 1: rag Rana. He is a senior analyst Software and I
Speaker 1: T Services for Bloomberg Intelligence. Bloomberg Intelligence provides unique real
Speaker 1: time research and context on a variety of industries and
Speaker 1: all markets and government factors that affect business. Our terminal
Speaker 1: customers can access this function at b I go on
Speaker 1: a rock. Thank you very much for coming in. Tell
Speaker 1: us a little bit about the details of Microsoft's report.
Speaker 1: I'm thinking cloud my my on the right track here. Absolutely.
Speaker 1: You know. Cloud Asure was up hunted in eight percent,
Speaker 1: which is something we've been This is the cloud computing
Speaker 1: division of Microsoft. It's the infrastructure as a service for
Speaker 1: for Microsoft. We saw this yesterday also with vm D
Speaker 1: and and you know IBM to certain effect that Brexit
Speaker 1: vote has not impacted enterprise software spending at this point.
Speaker 1: And with Microsoft today we see again that you know,
Speaker 1: spending has been relatively healthy compared to the you know,
Speaker 1: the huge volatility we saw across global markets. As far
Speaker 1: as the cloud division goes, does this mean that all
Speaker 1: cloud services are enjoying major popularity because I note that
Speaker 1: whenever we look at the results of Amazon, we always
Speaker 1: end up talking not just about retail but about those
Speaker 1: cloud services. That has been the trend for the last
Speaker 1: few quarters. And what we have seen, in fact in
Speaker 1: the last two or three that has been an acceleration
Speaker 1: in the adoption of cloud services, which we see across
Speaker 1: not just with Amazon. We also see it in IBM
Speaker 1: cloud division. Yesterday they reported articles cloud services they're also
Speaker 1: doing very well. So as companies move their ID infrastructure
Speaker 1: from legacy servers to to to to the cloud, you
Speaker 1: will see a lot of these companies benefit from that.
Speaker 1: Tell us about mobile technology and Microsoft, I have to
Speaker 1: admit that I got all this information from reading your
Speaker 1: Bloomberg Intelligence piece about Microsoft. Well, you know, as as
Speaker 1: we know, they have d emphasized phones. So the phone
Speaker 1: numbers were weak this quarter, as we expected. We are
Speaker 1: seeing a lot of their productivity applications that run on
Speaker 1: mobile devices they have done well and that's you know,
Speaker 1: that has been a trend for the past several quarters.
Speaker 1: Linked In the acquisition of Lincoln what what will that
Speaker 1: do to Microsoft's disposition as a cloud company but also
Speaker 1: as someone as you just described as uh, someone looking
Speaker 1: to try to generate new revenue. See, Microsoft wants to
Speaker 1: be relevant in the cloud world, and they have a
Speaker 1: very good portfolio of services in the in the case
Speaker 1: of infrastructure and platform. The software is a services where
Speaker 1: they have lagged companies like Salesforce or work Day and
Speaker 1: you know, we would we still need to see them
Speaker 1: to talk about what new products are going to come
Speaker 1: from this combination of Microsoft and LinkedIn, of whether it's
Speaker 1: going to be something of a of a sales channel
Speaker 1: or something of a you know, in a software that
Speaker 1: is online based that can help them breach that gap.
Speaker 1: Microsoft's cash balance, you note is over a hundred billion dollars.
Speaker 1: They're going to spend some of that, well, they's just
Speaker 1: spend someone LinkedIn. So it's right, is that but is
Speaker 1: that likely. I mean, do they need to be buying
Speaker 1: let's say, cloud computing services in order to add to
Speaker 1: their portfolio. See, the cash balance is very strong for
Speaker 1: a lot a lot of these tech companies. But but
Speaker 1: at the same time, it's sparked outside the US, so
Speaker 1: they might have to borrow money to in order to
Speaker 1: buy something. But you know that has been the case
Speaker 1: for a lot of these companies that if there is
Speaker 1: a whole in in their portfolio, they can use it,
Speaker 1: use this cache to to plug that. You've previously written
Speaker 1: that Microsoft's server products grew just five in the fiscal
Speaker 1: third quarter. You also mentioned that pressure on the personal
Speaker 1: computer growth is affecting Microsoft's obviously software sales, even though
Speaker 1: the surface tap is doing pretty well. Yeah, but both
Speaker 1: those numbers were actually better than expected in this in
Speaker 1: this particular quarter, right, server products and you know cloud
Speaker 1: services were up eight percent, So that's you know that
Speaker 1: turned the other way. PC shipments, according to I d
Speaker 1: C in this quarter were not as bad as they
Speaker 1: would they expecting it, which I'm suspecting must have helped
Speaker 1: a lot portion of their you know, Windows, O, E, M, Business, etcetera.
Speaker 1: And one of the comments I read was their their
Speaker 1: mix was towards the higher end products, which is similar
Speaker 1: to what you just mentioned the surface one, which is
Speaker 1: what drought drove some of the revenue. Talking about higher
Speaker 1: margin products, legacy products at Microsoft, don't they have higher
Speaker 1: margins than the cloud business. Yes, but that's because they
Speaker 1: are investing a lot more in cloud right now. So
Speaker 1: so as as that gate scale, as you see the
Speaker 1: benefits of that, you can expect margins of those cloud
Speaker 1: products to improve this. But have at things like licensing
Speaker 1: revenue for commercial PCs as well as server products. Do
Speaker 1: we need to watch those as well? Yes, But at
Speaker 1: the same time, you know, when you have an enterprise
Speaker 1: license agreement or a newity business UM, you will see
Speaker 1: some of that, you know, is not as volatile as
Speaker 1: some of the transactional revenue, and which is when you know,
Speaker 1: when we mentioned about the turbo products, they actually did
Speaker 1: better than expected. And the Windows ten roll out, I
Speaker 1: mean that continues to see what strong adoption. It has
Speaker 1: seen some strong adoption, but I think that the PC
Speaker 1: ship and data shows that maybe you know, it's the
Speaker 1: Windows tent is helping PC ship makers PC makers to
Speaker 1: UM you know, be able to get this refresh cycle
Speaker 1: that has been lagging for a while. I want to
Speaker 1: thank you very much for coming in and sharing your
Speaker 1: thoughts of Microsoft shares right now are up more than
Speaker 1: one and a half percent after reporting better than estimated
Speaker 1: earnings and sales on a rug rona. Thank you very
Speaker 1: much of Bloomberg Intelligence senior industry analysts. Of course, Bloomberg
Speaker 1: Intelligence providing unique in real time research on a variety
Speaker 1: of industries and markets, as well as government factors that
Speaker 1: affect businesses. Our terminal customers can access this function at
Speaker 1: b I Go. I'm pim Fox and this is Bloomberg
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