Microsoft (MSFT 113.91, +0.34, +0.29%) is trading at new all-time highs as the
stock has broken out above resistance near the $114 level. Microsoft may not garner as many headlines as the flashier mega
cap technology companies, but it remains a ‘core holding' among large cap
The stock has been in a very smooth, strong upend since breaking out to a twelve-year high in 2013. Some of this is being attributed to Satya Nadella’s focus shift to cloud services after assuming the role of CEO in 2014.
Transitioning the stalwart Office business to a subscription Office 365 service has paid off. Office 365 commercial revenue grew 35% in constant currency while Office 365 consumer subscribers grew 16% to 31.4 mln.
Microsoft's cloud computing business Azure is a distant second to Amazon Web Services in terms of market share, but ahead of Google's Could Platform, and the business grew 85% in constant currency in the fiscal fourth quarter.
Meanwhile, the Windows business has maintained its dominant market share as its modest growth is outpacing that of the PC market. Game services strengthens the Personal Computing segment outlook. The company's businesses are more defensive than elsewhere in the software sector.
On Wednesday, the company raised its quarterly dividend to $0.46/share from $0.42/share. That gives the stock a 1.6% dividend yield.
The company has a ~$875 bln market cap, making it the third largest publicly traded company in the world. The stock trades at 27x fiscal 2019 (June) adjusted earnings estimates. Growth is expected to slow to 11% on the top and bottom line in fiscal 2019. Earnings grew 17% with revenue up 14% in fiscal 2018. Cash flow will approach $50 bln in the coming years.
Microsoft revenue growth has accelerated six quarters in a row, reaching 17.5% in the fiscal fourth quarter. The company has exceeded quarterly results on the top and bottom line five quarters in a row.
Microsoft Ignite, the company's annual developer conference, takes places next week from September 24-28 in Orlando, FL.
The company is likely to report fiscal 2019 first quarter results on October 25, but that date has yet to be confirmed.
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