Microsoft Earnings Foreshadow Another Yearly High on Friday

Microsoft Corp. (NASDAQ: MSFT) reported fiscal fourth-quarter 2017 results after markets closed Thursday. The software behemoth reported adjusted earnings per share (EPS) of $0.98 on adjusted revenues of $24.7 billion. In the same period last year the company reported EPS of $0.69 on revenues of $22.64 billion. The consensus estimates called for EPS of $0.71 on revenues of $24.27 billion.

For the full fiscal year EPS totaled $3.31 and revenues came in at $96.7 billion. Analysts were looking for EPS of $3.03 and revenues of $96.24 billion. For the 2016 fiscal year, Microsoft posted EPS of $2.79 on revenues of $92.07 billion.

During the quarter, Microsoft returned $4.6 billion to shareholders in the form of share repurchases and dividends.

Intelligent cloud revenue rose 11% (up 12% in constant currency) and Windows OEM revenue rose 1% both nominally and in constant currency. The company now claims 27 million subscribers to its Office 365 Consumer subscription base. Revenue growth in the company’s Azure platform nearly doubled year over year.

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Microsoft did not offer guidance in its press release, but said that it would provide guidance during its conference call later this afternoon.

The consensus estimate for the company’s 2018 first fiscal quarter calls for EPS of $0.78 on revenues of $24.18 billion. For the full fiscal year ending in June 2018, EPS is forecast at $3.32 on revenues of $103.64 billion.

The company’s CFO, Amy Hood, said:

We delivered a strong finish to the year with 30% growth in commercial bookings this quarter. We will continue to invest in key areas that drive future growth for Microsoft and our customers.

Sales of the company’s 2-in-1 Surface fell by 2%, a big improvement over the 26% drop the company experienced in the prior quarter.

LinkedIn contributed $1.1 billion to fourth-quarter revenue, but weighed on corporate operating income to the tune of $361 million in acquisition-related costs.

Shares traded up about 1% at $75.00 in after-hours trading. The stock closed at $74.22 after posting a new 52-week high earlier in the day of $74.30. The 52-week low is $55.61. Prior to the earnings announcement the 12-month consensus price target on the stock was $75.20.

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