Friday, February 1, 2013
Microsoft Earnings Review: Windows Saves the Quarter!
Microsoft reported QE December 2012 financial results on January 24
Microsoft earnings peak with the calendar fourth quarter holidays and just missed matching the prior year. Earnings per share peaks for the past 4 years reveal Microsoft is treading water.
QE December 2012 $0.76
QE December 2011 $0.78
QE December 2010 $0.77
QE December 2009 $0.74
The ongoing existential question continues if Microsoft is ultimately relevant as the technology leading edge races mercilessly forward and therefore if the company life cycle has peaked. For now, CEO Ballmer has stayed in this brutal game with such worthy adversaries as Apple and Google but it is an uphill battle. It's hard out here for a Tech Giant!
Revenues and earnings per share growth rates have been a struggle for Microsoft. Future growth is possible, but robustness is doubtful.
The great news is total revenues reached an all-time high of $21.46 billion. Microsoft is still relevant, at least for now.
The sobering news is gross margin (73.47%) reached a 4-quarter low and second lowest in years. Competition and a changing technology landscape has lowered gross margins, which reached 80+% in the old Microsoft / Intel / Dell desktop days. Operating margin (36.22%) and net margin (29.72%) are respectable. The 18-quarter averages for gross, operating, and net margins are 77.87%, 37.86%, 27.72%, respectively.
Windows revenues saves the quarter in a big way! The annual holiday peak in Entertainment and Devices also assisted in boosting total revenues to a record high. However, the Entertainment and Devices revenues did not exceed the prior year peak.
Total assets are now a record $128+ billion. Apple, HP, and IBM are the other exclusive members of the Big Tech $100 Billion Assets Club, though Apple will surpass $200 billion total assets next quarter. Liquid assets (cash, cash equivalents, marketable securities) have increased to an amazing $68+ billion. Add noncurrent equity and other investments and total asset reserves reach nearly $79+ billion!
“Our big, bold ambition to reimagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers,” said Steve Ballmer, chief executive officer at Microsoft. “With new Windows devices, including Surface Pro, and the new Office on the horizon, we’ll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need.”
"We saw strong growth in our enterprise business driven by multi-year commitments to the Microsoft platform, which positions us well for long-term growth,” said Peter Klein, chief financial officer at Microsoft. “Multi-year licensing revenue grew double-digits across Windows, Server & Tools, and the Microsoft Business Division.”