Earnings Preview: Microsoft’s FY19Q2 will be marked by continued cloud growth and Surface hardware revenue

As the United States and China enter their 9 straight months of trade warfare that include tariff disputes, some US-based tech companies are begin forced to confront the realities of stalled negotiations as they report earnings to investors each quarter.

A primary example has been the readjusted earnings outlook Apple was forced to inform investors about in late 2018, and as Microsoft steps to the earnings stage, it’ll be interesting to see how their fiscal quarter has been affected, if at all.

NASDAQ.com has issued an early assessment of expected earnings of $1.09 a share on revenue of 32.49 billion for the quarter ending in December 2018 for Microsoft.

Putting things in perspective, a quarter for quarter comparison puts Microsoft’s assessed share price at an increased $.013 a share as well as an increased $5.57 billion in revenue for the quarter. Microsoft’s 2nd quarter earnings call, coming this afternoon, is shaping up to be another great one. 

Unlike Apple, Microsoft has effectively ousted out China through Windows copyright infringements and hasn’t been as reliant on the country as a growth sector for its pivot to the cloud. Reflecting that regional independence has been the three-week-long 13% share price increase from bullish Wall Street investors.

As noted by the NASDAQ assessment, part of the long term confidence from investors comes from the clear, diversified and growth portfolio of businesses Microsoft undertakes.

Microsoft is now more balanced and diversified than ever before, especially when factoring LinkedIn revenue, which is now tied to CEO Satya Nadella’s compensation.

All told, having expanded its reach over the years beyond software and personal computing, Microsoft is posting strong revenue and profit growth and seemingly operating on all cylinders. The company has fully transitioned towards faster-growing businesses

While Microsoft may continue to see growth on its current path, on the horizon competition and a saturated market may squeeze the company’s portfolio.

With the company’s cloud business growth marked at a 24% growth from year over year quarterly comparison in 2017 and 2018, competitors such as Amazon, IBM, Google and Alibaba will be sure to cut into that level of growth as more data points from Intel’s recent earnings reports indicate a leveling off of data center sales demand.
Microsoft is still set to accelerate its cloud growth throughout the rest of 2019 as it continues to sign big name retail brands, government contracts and scientific partnerships around the world.