Lei Feng net press:

Last week, Microsoft reported earnings for the first quarter of its 2018 fiscal year. Not surprisingly, Microsoft made a lot of money in the quarter. Microsoft’s shares rose as the market opened on Friday after the release of its earnings, closing 6.28 percent higher at $83.80 a share.

Looking at Microsoft’s financial situation, we have to say that the 40-year-old Microsoft is really a big man in the technology industry. Although Apple, Google and other companies are coming up behind, but the wave has not eliminated Microsoft, but added innovative elements to the company.

A tech mogul who plays steadily

Nearly 40 years ago (March 13, 1986), Microsoft went public on Nasdaq. The company’s market value jumped to $502 million and many billionaires were born.

Windows and Office have been a consistent source of revenue for Microsoft, but it missed the mobile era and failed in its attempts to carve out a share of the market with the development of Windows Phone and the acquisition of Nokia. Microsoft was also a bit late to the cloud, but Microsoft has a big name, good service and Azure turnover growth rate.

In terms of artificial intelligence, Microsoft is not to be left behind. Yoshua Bengio, one of the three pioneers of deep learning in artificial intelligence, has been hired as an artificial intelligence research consultant. Microsoft is showing off some of its ai capabilities with language assistant Cortna and Microsoft Xiaoice. For years to come, Microsoft will remain the dominant player in the tech world.

Why do you say so? Let’s start with this quarter’s earnings.

According to Microsoft’s official financial statements (FinancialStatementFY2018Q1) in the first quarter of fiscal 2018, the quarter, Microsoft’s revenue of $24.5 billion, up 11% from a year earlier, the gross profit was $162.6, gross margin was 66%, 2% higher than last fiscal year. This quarter. Microsoft’s net income was $6.576 billion, up 14 percent from a year earlier.

Based on earnings data, Lei Feng found that Microsoft’s performance in the last three fiscal years has been fairly stable. In the second quarter of each fiscal year, revenues rose sequentially, flattening out throughout the year.

From the perspective of net profit, Although Microsoft suffered a loss in the fourth quarter of fiscal year 2015, the loss in this quarter is mainly due to the inclusion of non-cash impairment charges related to the acquisition of Nokia devices and services business, and Microsoft’s restructuring and integration expenses.

But Microsoft didn’t suffer much, and its gross margin remained above 60% in each of the following quarters.

 

Following Microsoft’s first-quarter fiscal 2018 results, Merrill Lynch has this to say about Microsoft:

Even as Microsoft now faces the decline of PCS and Amazon’s dominance of the cloud industry, the company has been able to stabilize Windows and achieve higher and higher growth in cloud services. Microsoft has maintained this enduring business through cloud-based Office. Beyond that, Microsoft is targeting a much larger Addressable Market (TAM Total Addressable Market). Over the next three years, Microsoft’s businesses, which are doing well, will see continued growth.

Take another look at the revenue and operating profit figures for each of Microsoft’s business segments.

Microsoft has three parts of its business that make money: productivity and business processes, the intelligent cloud, and more personal computing.

Productivity and business processes include business and personal versions of Office, Skype, linkedin, ERP, CRM systems, etc.

Intelligent cloud includes public, private and hybrid Server products and cloud services, as well as enterprise consulting services, etc. Microsoft SQL Server, Windows Server, Visual Studio, Azure and so on all belong to this category.

More personal computing is targeted at personal end users, developers, and IT professionals. This includes Windows systems, Windows cloud services, hardware devices such as Microsoft Surface, PC, games including Xbox hardware and software, and services, advertising services for search engine (Bing), etc.

Lei Feng net (public number: Lei Feng net) according to the financial report data produced the revenue and operating profit of each business line chart.

From the revenue, the performance of the three businesses are stable. Productivity and business processes are Microsoft’s evergreen businesses in terms of operating profit, but there is a slight downward trend. While more personal business has a slight upward trend, intelligent cloud performance is stable.

According to Microsoft’s earnings call, productivity and business process revenue for the first quarter of 2018 was $8.238 billion, up 28 percent from a year earlier. Operating profit rose 3 per cent. Revenue from the business version of Office was up 42 percent from a year ago, while revenue from the personal version of Office was up 12 percent. Arguably, Office has been a big contributor to Microsoft’s revenue. Microsoft Dynamics’ revenue rose 13 percent. Linkedin reported $1.1 billion in revenue for the quarter. Linkedin generated 5 per cent of Microsoft’s revenue and gross margin in the quarter, but it also dragged down operating profit by 4 percentage points. Microsoft believes linkedin will be profitable for shareholders in fiscal 2018.

The smart cloud business brought in $6.9 billion in revenue for the quarter, up 14% from a year earlier. Among them, server products and cloud services grew 17% year on year. Azure grew 90 percent year over year.

The more personal computing business posted $9.378 billion in revenue in the quarter, up 3 percent from a year ago when mobile phones were excluded. Business and PERSONAL computers, to the traditional equipment manufacturing (OEM) division of 4% profit. Surface revenue rose 12 percent. Microsoft’s games revenue grew just 1 percent, with software and services for games up 21 percent, but losses on hardware offset much of that growth.

New growth for software giants

Led the

On June 13, 2016, Microsoft announced the acquisition of global professional networking site linkedin for $262. On December 8, 2016, Microsoft completed the acquisition of linkedin. Some are optimistic about the deal, while others are worried that Microsoft will make the same mistake it made with Nokia. Microsoft CEO Satya Nadella said the deal “brings together the world’s leading professional cloud with the world’s leading professional network,” adding that the deal could boost growth for linkedin, Microsoft’s Office365 and Dynamics services.

According to data released by Microsoft, linkedin’s revenue is on the rise and its operating losses are on the decline. And excluding amortization of intangible assets, linkedin’s operating profit was $78 million. Linkedin now has more than 530 million users, and Microsoft isn’t wildly optimistic that it won’t pay dividends to shareholders until 2018.

 

cloud

Back In 2010, former Microsoft CEO Ballmer announced an “All In” cloud and invested $8.7 billion In research and development. Satya was asked by former Microsoft CEO Satya Ballmer to lead the STB division, which laid the foundation for Microsoft’s cloud business. According to Synergy, which released data on Oct. 27, Microsoft’s cloud services are trailing AWS in market share, with much higher annual growth (90%) than AWS (around 40%).

Microsoft has also made some preparations for AI in its cloud services. Microsoft offers Azure Machine Learning Studio for businesses to build simple Machine Learning models, and “Cognitive Services” for businesses to build their own AI applications. Azure’s security mechanism is AI-based. Microsoft’s cloud services are also attracting gaming companies, with Pub-G, the developer and publisher of the recently popular PUBg Battlegrounds game, using Azure.

You can take it, you can put it down

Of course, Microsoft has taken its share of blows in the tech world.

Microsoft, which rose to prominence with operating systems, has had a few missteps with operating systems. Although It took Microsoft five years to develop Windows Vista, the feature-rich, clean-looking operating system failed to win over many users and was criticized for mismatching hardware. Microsoft ended mainstream support for Windows Vista on April 10, 2012, and officially ended all support on April 11 this year.

 

Microsoft was the latest giant to get started on mobile. In November 2011, Microsoft partnered with Nokia to launch the Lumia. On September 3, 2013, Microsoft announced that it had acquired the Nokia mobile phone business of Sunset West Hill for $72. The deal closed on April 25, 2014, but Nokia did not give Microsoft a mobile advantage. The Windows Phone operating system cannot survive mobile operating systems dominated by iOS and Android. In May 2016, Microsoft sold Nokia’s handset business to Foxconn for $350 million.

The Windows mobile operating system had just 0.03% of the global market, according to IDC in April. Microsoft executives also said they would not continue to focus on Windows 10 Mobile. In its earnings call this quarter, Microsoft said it ended its mobile business in November, and that the first quarter of 2018 was the last quarter to be affected by mobile. Microsoft is saying goodbye to mobile once and for all.

 

Beyond phones, Microsoft has had some business missteps with gaming hardware. As mentioned above, Microsoft loses money on gaming hardware. Last week, Kinect founder Alex Kipman said in an interview with Co.Design that Microsoft was discontinuing Kinect. Kinect was designed as an Xbox 360 to track the user’s whole body movements, and technically it’s a great product. However, the price is high, affecting the overall device performance is its hard wound, Microsoft also had to stop the loss in time.

Lei Feng net summary: Although Microsoft in some business decisions have some mistakes, but fortunately Microsoft can afford, also put down. In practice again and again also learned to advance with The Times, with the trend. This is certainly a rarity for a large company. It has irreplaceable products that it has accumulated along the way, new products that pioneer the future, and it is becoming less and less like a software company. The Microsoft of 40 years old, have is the internal force with certainty, the performance that stable play, be this internal force best proof.

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