Microsoft Falls As Results Fail to Sustain Lofty Valuation

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© Reuters.

By Dhirendra Tripathi 

Investing.com – Microsoft (NASDAQ:) shares were trading weaker in Wednesday’s premarket a day after the company’s March quarter results, which many found underwhelming. 

The stock has risen over 70% since the pandemic started, despite already having a valuation over $1 trillion.  At Monday’s close, it traded at over 35 times 2020 earnings, a multiple more usually associated with small, fast-growing startups.

The results nonetheless showed growth across all the company’s segments including its Windows platform, cloud services, LinkedIn, XBox, Search and Surface.  

The results came on a day when Alphabet (NASDAQ:), some of whose businesses rival Microsoft’s, posted a 34% gain in revenue to $55.31 billion, due largely to an advertising business that Microsoft doesn’t boast.  Microsoft revenue was $41.7 billion in the quarter through March and increased 19% from the same period a year ago. Xbox revenue growth at 34% shone through. 

Net income was $15.5 billion, higher by 44%. Diluted earnings per share were $2.03, rising 45%. 

LinkedIn revenues rose 25% in the quarter. For the full year, advertising revenues at the online job and social media platform for professionals topped $3 billion.

Server products and cloud services revenues rose 26% during the quarter, driven by 50% growth in revenue at Azure. 

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