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Bloomberg's Rana on Microsoft Boosted By Cloud Revenue (Audio) · Bloomberg Intelligence

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