Microsoft Corporation has gained the market confidence of the investors after soaring in the stock market last Friday and after beating the market expectations on its first quarter fiscal report for 2017. Behind this remarkable success, can the multinational tech company keep up its gains through the help of Surface products or will it decline amid the update errors on Windows 10?
After trading in a tight range for the last few quarters, the Redmond, Washington based tech company hit the $60 level last Friday, calling the attention of the investors. Following the successful earnings data, the stock ticked higher as it opened at 60.20 and settled at 59.64. Microsoft had a session high of 60.45 and a session low of 59.48 in the previous trading session.
With a market capitalization of $461.88 billion, the price earnings ratio of the stock stood at 28.38 and its dividend yield was 2.61 percent. Microsoft holds a return of assets of 9.20 percent and a return of equity of 22.30 percent, while its return of investment is 13.50 percent. The stock has a beta value of 1.19 with a long term debt to equity ratio of 0.57 and its free cash flow for the past year stands at 32.97.
For the third quarter, the tech juggernaut had revenue of $20.5 billion and net income of $4.75 billion or 60 cents per share. The company reported Non-GAAP revenue of $22.3 billion or 76 cents per share and an operating income of $5.2 billion.
(Image taken from www.microsoft.com)
One of the main contributors of Microsoft’s success was the smashing hit of Surface Pro4 and Surface Book together with its cloud business. The Surface series include hybrid tablets, a Surface Book and a Surface Hub. From the last quarter, the Surface division accumulated $926 million going head to head with Apple's iPad series.
To heighten the interest of the market with the Surface products, the company may release another model, probably an all-in-one Surface PC, on its upcoming Windows 10 event. Evidently, the contribution of Surface revenue has driven significant push to the tech company. Apart from the positive acceptance from the market, the Surface Pro 4 and Surface Book have catalysts to show the development of Windows 10 which faces negative feedbacks.
Surface Book has been known for being sleek hybrid notebook, which can be converted into a laptop and a tablet. Having a 180-degree access, it also has a 3 GHz processor, high resolution display and a complete metallic body. For the upcoming Surface Book 2, it is anticipated to upgrade its battery and to update the other features of the first released model.
Windows 10, Troubled?
In the middle of the ranging success of its cloud service and Surface series, the company is highly challenged by the criticisms brought by the current software update of Windows 10. Last week, the company conducted a forum discussing the downloading issue and other complaints. On Wednesday, the company is scheduled to conduct its Windows 10 event, where it is expected to address the concerns of the critics and to release new products and updates.
The underwhelming reception of the market on Windows 10 has gotten worse after the reported update patch. However, it seemed the company handled it with expertise and focused more on keeping the Windows 10 revenue relatively steady. Although the PC demand has been on the rock in the birth of Android and smartphones, Microsoft made sure that Windows 10 will still appear before the eyes of the users.
Apparently, integration of Windows 10 on Microsoft’s products supported the company in times of market trouble. At its event this coming Wednesday, the market will see what lies ahead for the tech giant in the coming years. What remains to be certain here was the initiative of the company to bring profound digital transformation for customers, infusing intelligence across all of their platforms and experiences as promised by CEO Satya Nadella.
The upbeat earnings and the innovation it is set to provide during its October event will push the stock higher. Technically, after a tight trading range, a high volatility may appear. It is reasonable enough that the current trend of Microsoft will surely excite the investors, thus, it may stay on the offensive ground for a while.
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