Shares of Microsoft Corporation (ticker: MSFT) dipped by 1.6 percent after the market closed Wednesday as the software giant reported quarterly revenue that rose 12 percent to $28.9 billion in the second quarter of fiscal year 2018, beating expectations.
Analysts had predicted the company would generate revenue of $28.4 billion, according to Thomson Reuters.
The company’s non-GAAP (generally accepted accounting principles) diluted earnings per share was 96 cents. Analysts had estimated 86 cents per share, according to Thomson Reuters.
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The company reported its operating income increased by 10 percent to $8.7 billion. Microsoft reported its GAAP net loss was $6.3 billion and non-GAAP net income was $7.5 billion. These GAAP results include a $13.8 billion net charge because of the Tax Cuts and Jobs Act.
Microsoft says its share repurchases and dividends in the second quarter of fiscal year 2018 totaled $5 billion.
“We delivered another strong quarter with commercial cloud revenue growing 56 percent year-over-year to $5.3 billion,” CFO Amy Hood says.
The software company’s gaming business is an area that investors should focus on because of the potential for more growth, says Raimo Lenschow, a Barclays analyst, in a research report on Jan. 25. Barclays increased the price target of Microsoft to $100 from $95 because its gaming division could add $5 to the share price, he says.
“In the short term, there will be excitement due to the healthy Xbox One X momentum,” he says. “We see this business transitioning away from the hardware-centric console cycle toward a software subscription model, which enables better revenue growth and predictability and higher margins.”
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The gaming division is now part of the More Personal Computing segment and receives “relatively little attention from investors given the dominance of the Windows franchise,” Lenschow writes. “However, with a $9 billion run rate and an ongoing cloud transition we see this changing.”
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Microsoft Corporation (MSFT) Revenue Jumps, Boosted by Cloud originally appeared on usnews.com
