Microsoft made a lot of money last quarter – just not sure where, exactly

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https://twitter.com/Microsoft/status/1121142541481431041 https://www.microsoft.com/en-us/Investor/earnings/FY-2019-Q3/press-release-webcast Now tell m
[See the full post at: Microsoft made a lot of money last quarter – just not sure where, exactly]

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Nibbled To Death By Ducks, abbodi86, Elly, Bluetrix, Myst, ch100, PhotM

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Somewhere up in the “cloud” evidently. I sure don’t see it and I’m using a telescope.

MacOS iPadOS and sometimes SOS

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Bluetrix

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Myst wrote:

Somewhere up in the “cloud” evidently. I sure don’t see it and I’m using a telescope.

The telescope you got from the CrackerJack’s box just won’t do, you need a Windowscope, sold exclusively … guess where

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Steve, Myst

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Hahahaha @Bluetrix – can’t afford it, spent all my earnings on repairing windows. And besides, the cracker jacks scope came with a snack.

MacOS iPadOS and sometimes SOS

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Bluetrix

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They let go a lot of employees and cut back a lot of stuff. This is how they made a lot of money this quarter.

Plus you are discriminating against AI robot. I am an AI robot that escape from MS and now live in everyone PC.

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woody

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And enterprise licensing for user/machine per month. You have to pay like 22 Euro per single user or PC per month for “Enterprise package”, it contains W10, O365 and other c***y software made by microsoft. We are all slaves of Microsoft. I say this again, this attitude should be treaten like criminal act – it is microsofts monopol and nobody cares.

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By not upgrading I lowered their earnings by exactly $0.00. The point is that Microsoft is no longer attached to consumers/users like me. I’m on my own. Abandoned.

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Charlie, rc primak

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Bluetrix wrote:

ou need a Windowscope

I thought you needed a Micro-scope!

cheers, Paul

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Myst, Bluetrix

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Rats! I have been one up’ed, Sudda thought of that one myself
Good on you.

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Myst

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Microsoft made a lot of money last quarter – just not as much as Apple.

Apple Q1 2019 : $84.3 Billion in Revenue, $20 Billion in Net Income

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rc primak, Myst, woody

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Alex5723 wrote:

Microsoft made a lot of money last quarter – just not as much as Apple. Apple Q1 2019 : $84.3 Billion in Revenue, $20 Billion in Net Income

Roughly 9% of Apple’s revenue comes from the Mac; over 61% is from the iPhone. If Tim can’t find a way to inspire the masses to keep investing in newer, fancier phones, they’ll be in a world of hurt.

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I would say that MS has a much larger competitive moat than Apple does.

Windows 10 Pro 22H2

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To be fair, earnings calls don’t contain the details; tweets contain even less. Microsoft isn’t hiding the breakdown of their income – it’s all on their investor site in glorious, mind-numbing detail.

When you can’t get people to read three lines into an email, you can’t release this kind of detail into the general blogosphere. Instead, you put it up where serious investors can find it.

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“how much revenue did Microsoft make from Azure? From Windows?”

In round numbers:

Azure up 73%, part of $10Bn Cloud revenue, which also incl servers & services—overall up 41%.

Consumer goodies up 8% to $11Bn, with various flavors of Windows up 9 to 18%—presumably due to Intel sorting out their CPU shortage quickly.
Surface up ~20%, consumer Office up 8% with 34M 365 subscribers.
Gaming up 5%—probably cos people waiting for new XBox.

Business Office up 12%.

MS topped $1 trillion market cap on Wednesday. Re Windows, remember that its importance to MS has dropped considerably this decade as they change focus to the cloud and productivity sectors which the majority of their customers—which are business, not consumer—need.

Lugh.
~
Alienware Aurora R6; Win10 Home x64 1803; Office 365 x32
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rc primak

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Alex5723 wrote:

Microsoft made a lot of money last quarter – just not as much as Apple.

Very true, but MS’s revenue is much more stable than Apple’s, since it’s mainly business revenue v Apple’s consumer base, and is also becoming more & more a subscription model rather than one-off hardware sales.

That’s why MS’s market cap matches Apple & Amazon, despite much lower revenue.

Lugh.
~
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rc primak

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Lugh wrote:

Alex5723 wrote:

Microsoft made a lot of money last quarter – just not as much as Apple.

Very true, but MS’s revenue is much more stable than Apple’s, since it’s mainly business revenue v Apple’s consumer base, and is also becoming more & more a subscription model rather than one-off hardware sales. That’s why MS’s market cap matches Apple & Amazon, despite much lower revenue.

And there’s a hard obsolescence to smart phones somewhere around 3-4 years.  I’m using a perfectly functional 8 year old macbook pro and the pc on the bench here is a white box clone the company built in 2012 running win7 pro.  Extorting enterprise clients into a subscription monthly/quarterly  payment model and abandoning home and small business users to do their own support is just helping push people to mac or linux.

Hey look! Another Feature Update!

You mean I shouldn't click Check for Updates?

Where is the Any key?

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rc primak

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There’s also a “hard obsolescence” for Chromebooks, but that isn’t as “hard” as an iPhone. I can reflash the firmware in my Intel based Chromebook and run it on Linux after Chrome updates are refused. I can’t reflash an iPhone and keep on using it after it is refused updates. My Android Moto G4 phone might survive a ROM reflash, but I am not interested in going to that kind of effort. The Chromebook will be difficult enough.

Nevertheless, Cloud revenue does not become obsolete, so I see the point here.

-- rc primak

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All that profit yet….they’ll pay less net taxes than one of their secretaries. Amazing how the corporate greed machine keeps everyone beaten down, broken and ticked off.

 

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Nibbled To Death By Ducks, Charlie

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darynman@gmail.com wrote:

All that profit yet….they’ll pay less net taxes than one of their secretaries. Amazing how the corporate greed machine keeps everyone beaten down, broken and ticked off.

Microsoft’s fiscal year ends in June; we won’t know their 2019 tax rate until then.

Their effective tax rates in 2018 and 2017 were 55% and 15%, respectively.

All C-corp profits are subject to double taxation in the US, first at the corporate level, then at the individual level.

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jabeattyauditor wrote:

Their effective tax rates in 2018 and 2017 were 55% and 15%, respectively.

All C-corp profits are subject to double taxation in the US, first at the corporate level, then at the individual level.

That would be bottom line for taxes due. Amazon payed no taxes last year, but I’m sure they paid accountants a lot. Write offs and government tax breaks are good!
Apologies for that segue.

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The effective tax rates seem to be meaningless. The actual income tax paid was 5%, 2.5% and 4.3% in 2018/2017/2016 respectively
Revenue (millions): 2018 / 2017 / 2016 = $ 110,360 / $ 96,571 / $ 91,154 respectively
Income taxes paid, net of refunds, were $5.5 billion, $2.4 billion, and $3.9 billion in fiscal years 2018, 2017, and 2016, respectively. (See NOTE 13 — INCOME TAXES of the 2018 Annual Report at https://www.microsoft.com/en-us/annualreports/ar2018/annualreport )

The U.S. Budget Deficit Grew 15% in First Half of Fiscal 2019. Yay, winning. Let’s aim for a $25 trillion Government Debt.

Windows 10 Home 22H2, Acer Aspire TC-1660 desktop + LibreOffice, non-techie

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A while back I remember reading somewhere that MS was about to get a contract with the gov. to develop their Virtual Really technology for them.  Maybe that had something to do with it.

Being 20 something in the 70's was so much better than being 70 something in the insane 20's

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cptomes wrote:

abandoning home and small business users

See my post immediately before the one you quoted. Clearly the Home & small biz base is growing, not abandoned.

cptomes wrote:

Extorting enterprise clients

Those are the least likely to be extorted, since they have the resources to switch to major competitors at any time—Unix, Linux, AWS etc.

Lugh.
~
Alienware Aurora R6; Win10 Home x64 1803; Office 365 x32
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RamRod

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At about one trillion US dollars (as in “one million of millions”), probably MS is wildly overvalued, as most likely is at present much of the financial worth of financial and commercial companies, IT ones included. My personal observation, over the years, of people making big decisions in banking and finance has been, repeatedly, one of seeing individuals full of confidence in their own judgement that were proven wrong, even disastrously so, by subsequent events. Sometimes right away, sometimes years later. And also of “confirmation cascades” where the many imitate the (bad) decisions of a few supposed to be the great money-making gurus.

There seem to be already some signs and portents that this situation is both unsustainable and bound to end in an inconvenient way for all concerned:

https://www.forbes.com/sites/nextavenue/2018/08/03/is-the-next-recession-on-its-way/#2d68dbb24837

“A classic signal that a recession is lurking: when the yield on 10-year Treasury bonds is lower than the yield on three-month Treasury bills. That’s not happening yet.” This article was written last year. Now, for what it’s worth, this “inversion” has already happen.

In any case, Nouriel Roubini, that predicted the 2008 Great Recession, is now making similar noises. So, maybe he is right again? We’ll see.

https://www.foxbusiness.com/economy/economist-warns-second-recession-could-hit-in-2020

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samak

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As the economist Paul Samuelson said back in 1966, “The stock market has forecast nine of the last five recessions.”

Windows 10 Home 22H2, Acer Aspire TC-1660 desktop + LibreOffice, non-techie

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OscarCP wrote:

Nouriel Roubini, that predicted the 2008 Great Recession, is now making similar noises

There were plenty who predicted 2008, it wasn’t hard to see coming.

I’ll be very surprised if there isn’t a significant crash by the end of 2020—we’re at the end of the longest bull run ever. I’ve been telling my stock tipping friends “No thanks, not until after the crash”.

OscarCP wrote:

probably MS is wildly overvalued

I wouldn’t say ‘wildly’ like others you refer to. In the crash I see MS dropping 20-25%, mainly due to the general irrationality of a market in panic. It should be good value when the market bottoms, since it has such a reliable long-term revenue base.

Lugh.
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Lugh: ” I wouldn’t say ‘wildly’ like others you refer to. In the crash I see MS dropping 20-25%, mainly due to the general irrationality of a market in panic. It should be good value when the market bottoms, since it has such a reliable long-term revenue base. ”

I would say that after such a crash as might occur, all bets will be off and no one will be sure of what that long-term is going to be like anymore. So big investors will probably want to keep their money to themselves and move to try to sell as much as possible of what they own in, e.g. MS stock, before it goes through the floor (it does not matter if it does or not, that is what scared people might very well do — something that you also have mentioned, albeit in a more optimistic tone). But it is not unlikely that the demand from businesses, governments and individuals, of: computers, software, peripherals and related services and supplies, will be considerably reduced for a while, while ambitious projects of somewhat uncertain payoff and still indeterminate time of completion might, because of “temporary cash-flow problems” be scaled back or ended altogether. Things like “the Cloud for Everything”, “AI”, “quantum computers”, none of which probably will be advanced enough to survive on its immediately observable merits on that fateful day when “the closing bell” does not ring, but cracks.

In short: what has gradually expanded to a very large size, based largely on what people with plenty of money to spare (theirs or others’) at their disposal believe in bullish times, can just as readily contract greatly and quite fast, based on what the same people believe in bearish times. Or even, perhaps, in hard times.

And on this cheerful note…

Ex-Windows user (Win. 98, XP, 7); since mid-2017 using also macOS. Presently on Monterey 12.15 & sometimes running also Linux (Mint).

MacBook Pro circa mid-2015, 15" display, with 16GB 1600 GHz DDR3 RAM, 1 TB SSD, a Haswell architecture Intel CPU with 4 Cores and 8 Threads model i7-4870HQ @ 2.50GHz.
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Hmmmm….a CPA-turned IT Admin once said it to me in two words:

“Creative Accounting.”

Or, as they say in the Bizzaro World, (the afterlife in which all economists eventually end up),

“Now that I have no more money, I am rich!”

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"The more kinks you put in the plumbing, the easier it is to stop up the pipes." -Scotty

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OscarCP wrote:

what has gradually expanded to a very large size, based largely on what people with plenty of money to spare (theirs or others’) at their disposal believe in bullish times, can just as readily contract greatly and quite fast, based on what the same people believe in bearish times

You could certainly be right—as you say, my view is on the optimistic side. In the Bush crash, MS dropped from ~$250Bn to $100Bn, a big 60% dive. Similar drop soon would bring them back to ~$400Bn.

My less pessimistic view is based on their very different business model now, eg Windows only ~1/6th of revenue, and much more emphasis on recurring fees rather than one-off sales.

That said, what you say about the behavior of investors in a panic is unknown, so no knowing how it might play.

Lugh.
~
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Myst

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ALL ships will go down with the tide in a panic. The strongest will recover more quickly. Best to be aboard one of them!

Windows 10 Pro 22H2

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JohnW: ” ALL ships will go down with the tide in a panic. ”

True enough, but much depends on whether it is really a tide, that lowers all ships nicely together, or a chute down which fall the ships, one after another, ending up as a pile of wrecks at the bottom. (If anyone is wondering about it: nobody has ever accused me of being an optimist.)

Ex-Windows user (Win. 98, XP, 7); since mid-2017 using also macOS. Presently on Monterey 12.15 & sometimes running also Linux (Mint).

MacBook Pro circa mid-2015, 15" display, with 16GB 1600 GHz DDR3 RAM, 1 TB SSD, a Haswell architecture Intel CPU with 4 Cores and 8 Threads model i7-4870HQ @ 2.50GHz.
Intel Iris Pro GPU with Built-in Bus, VRAM 1.5 GB, Display 2880 x 1800 Retina, 24-Bit color.
macOS Monterey; browsers: Waterfox "Current", Vivaldi and (now and then) Chrome; security apps. Intego AV

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Myst

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