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Thursday, April 28, 2011

Microsoft Financial Performance Stalls in Q1 (Financial Charts, Review) *Total revenues & EPS drop* MSFT

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Microsoft reported calendar Q1 2011 financial results on April 28, 2011
* Charts and commentary have been updated for Microsoft calendar Q1 March 2011 financial results *


Microsoft Q1 Financial Performance Stalls

Microsoft Summary Calendar Q1 2011 Microsoft calendar Q1 March 2011 financial performance dropped from the record-setting calendar Q4 2010. Earnings per share of $0.61 were a 3-quarter low. Q1 has been an annual cyclical low for Microsoft for 3 years. Gross margin increased slightly but net margin decreased. Financial position continues strong, very liquid, and total assets are now just below $100 billion.

Microsoft Income Statement Calendar Q1 2011 Microsoft reported total revenues of $16.43B, net income of $5.71B, and earnings per share of $0.61. From the prior calendar quarter Q4 2010, total revenues were down -17.67%, net income down -21.13%, and earnings per share down -20.78%. Compared to the prior calendar year Q1 2010, these were up +13.27%, +30.60%, and +35.56%, respectively. For calendar Q1 2011, gross margin increased QoQ to 76.28%, but is still below historical 80+% range. Operating margin dropped QoQ to 34.75%, which is a 6-quarter low. Net margin dipped to 31.85%, but is the 3rd consecutive quarter above 30%. Cash flow from operations per share increased dramatically to $1.02 from the prior Q4 2010 of $0.49. Most of the increase in cash flow was attributable to a decrease in accounts receivable.

Microsoft Balance Sheet Calendar Q1 2011 Total assets increased QoQ +8.04% to a record $99.7B from the prior quarter of $92.3B. The capital to assets ratio (total stockholders' equity divided by total assets) increased QoQ to 53.60%. The current ratio (current assets divided by total assets) is a very liquid 66.44%, which is a multi-year high. Microsoft is very liquid with strong capital and  has $50+B in cash reserves (cash, cash equivalents, and marketable securities).

Microsoft Business Outlook Microsoft reaffirmed operating expense guidance of $26.9 billion to $27.3 billion for the full year ending June 30, 2011. Microsoft also offered preliminary operating expense guidance of $28.0 billion to $28.6 billion for the full fiscal year ending June 30, 2012.


Microsoft Financial Performance by the Quarters (Charts)

Microsoft Earnings per Share and Cash Flow per Share (Chart) Below is a chart of quarterly earnings per share and cash flow from operations per share. Earnings per share dipped during the Global Recession but has now been above $0.60 for 3 consecutive quarters, including record high of $0.77 in Q4 December 2010 and the current Q1 March 2011 of $0.61. The current EPS is a 3-quarter low. Cash flow per share rose to a multi-year high of $1.02 in the current Q1 March 2011. Large changes in accounts receivable have been a major variable in the swings in cash flow per share.


Microsoft Total Revenues, Operating Income, and Net Income (Chart) Below is a chart of quarterly total revenues, quarterly operating income, and quarterly net income. Total Revenues reached an all-time high of $19.95B in Q4 December 2010, but dipped to $16.43B in the current Q1 March 2011. Operating Income reached a near-record of $8.2B in Q4 December 2010, but dropped $5.71B in current Q1 March 2011. The all-time high continues to be $8.51B in Q4 December 2009. Current Q1 March 2011 Net Income of $5.23B also decreased from the Q4 December 2010 of $6.634B. The all-time high continues to be $6.662B in Q4 December 2009.


Microsoft Gross Margin, Operating Margin, and Net Margin (Chart) Below is a chart of quarterly gross margin, quarterly operating margin, and quarterly net margin. Gross Margin increased slightly to 76.28% in Q1 March 2011, after a multi-year low was set in Q4 December 2010 of 75.78%. Both are well below the historical 80+% area. This has been the big negative for Microsoft's latest 2 quarters. Operating Margin dropped to 34.75% in the current Q1 March 2011, which is below historical levels and the 40% benchmark. Operating expenses were actually reasonable, it's the drop in Total Revenues that pulled down Operating Margin. Current Q1 March 2011 Net Margin of 31.85% is reasonable, but below the prior 2 quarters of approximately 33% and is mostly attributable to a lower effective income tax rate.


Microsoft Return on Assets (Chart) Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended.  The ROA dipped during the Global Recession but has since rebounded. The current Q1 March 2011 increased slightly to 23.97%, which is still excellent.


Microsoft Growth Rates (Chart) Below is a chart of the quarterly (QoQ, Q/Q, quarterly change) growth rates for total revenues and earnings per share. Total Revenues decreased -17.67% in Q1 March 2011, after increasing for 3 consecutive quarters, by +10.59%, +0.97%, and now +23.20%. Earnings per Share decreased -20.78% in Q1 March 2011, after increasing for 3 consecutive quarters, by +13.33%, +21.57%, and now +24.19%. Q1 is historically the weakest quarter for Microsoft, especially after the Q4 annual cyclical peak due to holiday sales.



Microsoft Reports Calendar Q1 2011 Financial Results
Strong enterprise and Xbox momentum drive revenue growth of 13% and earnings per share of $0.61.


“We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses," said Peter Klein, chief financial officer at Microsoft. "Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications."

Microsoft Business Division revenue grew 21% year-over-year. Since its release last spring, Office 2010 has become the fastest-selling version of Office in history, and the integrated innovation with SharePoint, Exchange, Lync and Dynamics CRM is driving significant growth for the division.

Server & Tools revenue grew 11% year-over-year, the fourth consecutive quarter of double-digit growth. Strong business adoption of Windows Server 2008 R2, SQL Server 2008 R2, and System Center are driving record revenue and margin expansion.

Windows 7 remains the fastest selling operating system in history with 350 million licenses sold. Revenue for the segment was down 4% in the third quarter, in line with the PC trends, excluding prior year launch impact.

Online Services Division revenue grew 14% year-over-year primarily driven by increases in search revenue. Bing's US search share increased to 13.9% this quarter.

Entertainment & Devices Division grew 60% year-over-year, fueled by Kinect for Xbox 360, the fastest-selling consumer electronics device in history, continued strong Xbox 360 console sales and growth of Xbox Live.

"We delivered strong third quarter revenue from our business customers, driven by outstanding performance from Windows Server, SQL database, SharePoint, Exchange, Lync and increasingly our cloud services," said Kevin Turner, chief operating officer at Microsoft. "Office had another huge quarter, again exceeding everyone's expectations, and the addition of Office 365 will make our cloud productivity solutions even more compelling. We continue to see strong adoption of our cloud-based services among the Fortune 500."


About Microsoft

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential. Employees: 88,596 worldwide at June 30, 2010.


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Wednesday, April 20, 2011

VMware Reports Record Q1 Earnings! (Financial Charts, Review) *Margins stable to improved* VMW

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VMware reported Q1 2011 financial results on Tuesday, April 19, 2011
*Charts and commentary have been updated for VMware Q1 March 2011 financial results*


VMware Reports Record Q1 Earnings!

VMware Summary Q1 2011 VMware reported record total revenues, operating income, net income, and earnings per share for Q1 2011. Financial position continues liquid with strong capital. The only negative on VMware is the historically low return on assets, although much improved in recent quarters, which continues below 7%.

VMware Income Statement Q1 2011 VMware reported record total revenues of $843.7M, record net income of $125.8M, and earnings per share of $0.29. From the prior quarter Q4 2010, total revenues were up +0.96%, net income up +4.95%, and earnings per share up +3.57%. From the prior year Q1 2010, these were up +33.18%, +60.43%, and +52.63%, respectively. Gross, operating, and net margins were stable to improved at 82.23%, 18.19%, and 14.91%, respectively. Cash flow from operations was a much improved and record $1.11 per share.

VMware Balance Sheet Q1 2011 Total assets increased +3.70% QoQ to a record $7.05B. The capital to assets ratio (total stockholders' equity divided by total assets) slightly increased to 56.64%. The current ratio (current assets divided by total assets) is a very liquid 64.80% and a multi-year high. VMware is very liquid with strong capital. Q1 total deferred revenue increased $118M and +6.36%.


VMware Performance by the Quarters (Charts)

VMware Earnings Per Share and Cash Flow per Share (Chart) Below  is a chart of quarterly earnings per share and cash flow from operations per share. Current earnings per share of $0.29 is a multi-year high and matches the previous peak in December 2008 at $0.29. Earnings per share have now improved for 3 consecutive quarters. Current cash flow per share of $1.11 is at an all-time high.


VMware Total Revenues, Operating Income, and Net Income (Chart) Below is a chart of quarterly total revenues, operating income, and net income. Current Total Revenues are at 6th consecutive quarterly record high of $844M. Current Operating Income is at a 2nd consecutive quarterly record high of $154M. Current Net Income is at a 2nd consecutive quarterly record high of $126M.


VMware Gross Margin, Operating Margin, and Net Margin (Chart) Below is a chart of quarterly gross margin, operating margin, and net margin. Gross Margin has been stable in the 80%-83% range in recent quarters and is currently 82.23%. Current Operating Margin of 18.19% is an 8-quarter high, after fluctuating in prior years. Current Net Margin of 14.91% is at a 9-quarter high and the highest since Q4 December 2008 (21.66%).


VMware Return on Assets (Chart) Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended. The ROA peaked in March 2009 at 9.12%, dipped to less than half the peak, and has yet to fully recover. However, the ROA has improved for 5 consecutive quarters to the current 6.53%. This is the negative about VMware: a low ROA for a technology sector company. For a leading-edge technology company, a minimum 10% ROA should be expected and even 20% is a reasonable expectation.


VMware Growth Rates (Chart) Below is a chart of the quarterly (QoQ, Q/Q, quarterly change) growth rates for revenues and earnings per share. Total Revenues have increased for 7 consecutive quarters, ranging from the current +0.96% to +24.19% in Q4 December 2009. Earnings per Share have increased 3 consecutive quarters and the current +3.57% to +40.00% last quarter Q4 December 2010.



VMware Reports First Quarter 2011 Financial Results

PALO ALTO, CA, April 19, 2011 (MARKETWIRE via COMTEX) - VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the first quarter of 2011:

-- Revenues for the first quarter were $844 million, an increase of 33% from the first quarter of 2010.
-- Operating income for the first quarter was $154 million, an increase of 50% from the first quarter of 2010. Non-GAAP operating income for the first quarter was $252 million, an increase of 44% from the first quarter of 2010.
-- Net income for the first quarter was $126 million, or $0.29 per diluted share, compared to $78 million, or $0.19 per diluted share, for the first quarter of 2010. Non-GAAP net income for the quarter was $204 million, or $0.48 per diluted share, compared to $133 million, or $0.32 per diluted share, for the first quarter of 2010.
-- Operating cash flows for the first quarter were $478 million, an increase of 35% from the first quarter of 2010. Free cash flows for the quarter were $473 million, an increase of 45% from the first quarter of 2010.
-- Trailing twelve months operating cash flows were $1.3 billion, an increase of 20%. Trailing twelve months free cash flows were $1.3 billion, an increase of 39%.
-- Cash, cash equivalents and short-term investments were $3.7 billion and unearned revenue was $2.0 billion as of March 31, 2011.

U.S. revenues for the first quarter of 2011 grew 26% to $400 million from the first quarter of 2010. International revenues grew 40% to $444 million from the first quarter of 2010.

License revenues for the first quarter of 2011 were $419 million, an increase of 34% from the first quarter of 2010. Service revenues, which include software maintenance and professional services, were $425 million for the first quarter of 2011, an increase of 32% from the first quarter of 2010.

"The quarter's strong performance underscores the value that VMware is providing customers on their journey to cloud computing," said Paul Maritz, chief executive officer. "Customers continue to invest in our portfolio of virtualization and cloud infrastructure solutions to remove complexity and enable IT as a Service."

"VMware's first quarter results were driven by strong demand across all geographies," said Mark Peek, chief financial officer. "Second quarter 2011 revenues are expected to be in the range of $860 and $880 million, a year-over-year increase of 28% to 31%. For the year, we expect annual revenues to be in the range of $3.55 billion and $3.65 billion, an increase of 24% to 28% compared to 2010. We expect our non-GAAP operating margin for 2011 to expand slightly from 2010."


About VMware

VMware delivers virtualization and cloud infrastructure solutions that enable IT organizations to energize businesses of all sizes. With the industry leading virtualization platform -- VMware vSphere(R) -- customers rely on VMware to reduce capital and operating expenses, improve agility, ensure business continuity, strengthen security and go green. With 2010 revenues of $2.9 billion, more than 250,000 customers and 25,000 partners, VMware is the leader in virtualization, which consistently ranks as a top priority among CIOs. VMware is headquartered in Silicon Valley with offices throughout the world and can be found online at http://www.vmware.com/

VMware, VMware vSphere, VMware vCenter, VMware vCloud and Cloud Foundry are registered trademarks or trademarks of VMware, Inc. in the United States and/or other jurisdictions. Other marks mentioned herein are trademarks which are proprietary to VMware, Inc. or another company.


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Tuesday, April 19, 2011

Intel Q1 Earnings Flat at $3.2B (Financial Charts, Review) *Gross margin drops* INTC

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Intel reported Q1 2011 financial results on April 19, 2011
*Charts and commentary have been updated for Intel Q1 March 2011 financial results*


Intel Q1 Earnings Flat at $3.2B

Intel Summary Q1 2011 Intel Q1 2011 financial results were about the same as the prior quarter, a net income of about $3.2B for each quarter. Gross profit margin dropped, even though total revenues were a record $12.8B. Financial position continues strong. Intel's 2011 guidance, business outlook, is below the charts. The Q4 2010 financial statements were restated plus there was an accounting change, making QoQ comparisons difficult.

Intel Income Statement Q1 2011 Intel reported record total revenues of $12.8 billion, $3.2 billion net income, and $0.56 earnings per share. From the prior quarter Q4 2010, total revenues were up +12.1%, net income down -0.60%, and earnings per share were unchanged at 0.00%. From the prior year Q1 2010, total revenues were up +24.7%, net income up +29.4%, and earnings per share up +30.2%. The Q1 2011 gross margin dropped to 61.38% from 67.47% QoQ. The operating margin of 32.4% and net margin of 24.60% dropped accordingly.

Intel Balance Sheet Q1 2011 Total assets have reached an all-time high of $65.5 billion, after dipping as low as $48.5 billion in Q1 2009. Intel continues liquid and well capitalized. The current ratio, current assets / total assets, dropped to 34.8%. Capital to assets, total stockholders' equity / total assets, dropped to 72.2%, which below the historical range for Intel (75% to 80%). The liquidity and capital ratios decreased as a result of an accounting change, an increase in property, plant, and equipment (+$1.6B), and a restatement of the Q4 2010 financial statements. A new balance sheet item appeared in long-term assets, Identified Intangible Assets, of $6.872B.


Intel Performance by the Quarters (Charts)

Intel Earnings Per Share (Chart) Below is a chart of quarterly earnings per diluted share. Current earnings per share continued at $0.56 QoQ, but have remained above $0.50 for 4 consecutive quarters, since Q2 June 2010.


Intel Total Revenues, Operating Income, and Net Income (Chart) Below is a chart of quarterly total revenues, quarterly operating income, and quarterly net income. Total revenues continue to be impressive and are at an all-time high of $12.8 billion in Q1 2011. Current operating income of $4.1B appears to be an all-time high. Current net  income of $3.16B is just below the Q4 2010 all-time high of $3.18B.


Intel Gross Margin, Operating Margin, and Net Margin (Chart) Below is a chart of quarterly gross margin, operating margin, and net margin. Gross margin for Q1 2011 of 61.38% dropped from Q4 2010 of 64.64%. Operating margin correspondingly decreased to 32.37%, which is the lowest since Q4 2009. Net margin for also decreased to 24.60%, but is still historically high.


Intel Return on Assets (Chart) Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended. The ROA dipped during the Global Recession but has improved for 4 consecutive quarters, as previous, poor-performance quarters drop out of the rolling, moving ROA to result in an increasing ROA. The Q1 2011 ROA was an impressive 20.46%. This indicates very effective and efficient deployment of assets.


Intel Geographic Revenues (Chart) Below is a chart of revenues by region. For the current Q1 2011 reported, the only noteworthy trend was an increase in Americas from 20.04% to 21.13% QoQ and a decrease in Europe from 13.81% to 12.80% QoQ.


Intel Growth Rates (Chart) Below is a chart of the quarterly (QoQ, Q/Q, quarterly change) growth rates for revenues and earnings per share. Intel is not a high growth company and stock but a very large technology company ($65B+ total assets). Growth rates are expected to be subdued now that Intel has bounced back from the lows of the Great Recession. Q1 2011 net revenues continued upwards +12.13% QoQ but earnings per share was flat at 0.00% mostly as a result of a decreased gross profit margin. The chart below covers only some recent quarters through the latest quarter reported. The rapid plunge in total revenues and earnings per share and the subsequent rebound as a result of the Great Recession and subsequent recovery resulted in some extreme percentages that obscure recent data.



Intel Reports First Quarter 2011 Financial Results

SANTA CLARA, Calif., April 19, 2011 - Corporation today reported record EPS and revenue on both a GAAP and non-GAAP basis.

On a non-GAAP basis, revenue was $12.9 billion, operating income was $4.3 billion, net income was $3.3 billion, and EPS was 59 cents. On a GAAP basis, the company reported first-quarter revenue of $12.8 billion, operating income of $4.2 billion, net income of $3.2 billion, and EPS of 56 cents.

The company generated approximately $4.0 billion in cash from operations, paid cash dividends of $994 million, and used $4.0 billion to repurchase 189 million shares of common stock.

"The first-quarter revenue was an all-time record for Intel fueled by double digit annual revenue growth in every major product segment and across all geographies," said Paul Otellini, Intel president and CEO. "These outstanding results, combined with our guidance for the second quarter, position us to achieve greater than 20 percent annual revenue growth."


Intel Q2 2011 and Full Year 2011 Business Outlook

Q2 2011
• Revenue: $12.8 billion, plus or minus $500 million.
• Gross margin percentage: 61 percent, plus or minus a couple percentage points.
Full-Year 2011
• Gross margin percentage: 63 percent, plus or minus a few percentage points.
• 2011 will have 53 weeks of business versus the typical 52 weeks, as the company realigns its fiscal year with the calendar year.


About Intel

Intel, the world leader in silicon innovation, develops technologies, products, and initiatives to continually advance how people work and live. Founded in 1968 to build semiconductor memory products, Intel introduced the world's first microprocessor in 1971. Intel's mission statement, values, and objectives:

Our mission
Delight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live.

Our values
Customer orientation
Results orientation
Risk taking
Great place to work
Quality
Discipline

Our objectives
Extend our silicon technology and manufacturing leadership
Deliver unrivaled microprocessors and platforms
Grow profitability worldwide
Excel in customer orientation


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