Microsoft trusts the cloud to double its profits

The services in the cloud and especially the Azure platform were once again the key that allowed Microsoft to close its fiscal year 2019 with more than twice the benefits as last year, although this segment began to offer its first symptoms of fatigue.

The firm of Redmond announced Thursday a net profit of 39.240 million dollars (34.794 million euros), more than double the 16.571 million (14.693 million euros) obtained in the previous year , and an increase in turnover of 14% to reach 125,843 million dollars (111,814 million euros).

As usual in recent years -especially since Satya Nadella took over as CEO of the company, replacing the historic CEO Steve Ballmer in 2014- the great engine behind Microsoft’s growth was again the cloud, which entered a 21 % more than a year ago.

Within this business segment, which the firm has dubbed “Intelligent Cloud”, the most prominent element was also once again its Azure service platform, a direct competitor of Amazon Web Services (AWS) and Google Cloud and whose turnover went up 64%

Although it is still very good, this percentage of growth is the lowest that Azure has experienced in the last four years (in 2018, for example, it grew 89%), a slowdown that points to a certain fatigue in the market, where only Azure, but also its competitors, have grown at a dizzying pace in recent times.

The increase in revenue in the cloud was followed by the business segment “Productivity and Business Processes”, which includes, among other software products, the popular Office package and the professional social network LinkedIn, which in 2019 had a 14 , 8% more.

Finally, ” More Personal Computing”, which hosts products and services as disparate as the Windows operating system and the revenues derived from the Xbox video game console, increased turnover by 8.1%.

The increase in revenues, however, is not the main element behind the drastic increase in profits, but this is mainly explained by the large reduction from one year to the next in terms of tax provisions.

The 19,903 million allocated by Microsoft in 2018 to pay taxes were drastically reduced this year to 4,448 million, a downward consequence of the fiscal reform promoted by the Government that presides over Donald Trump, approved in December 2017 and that began to be implemented in 2018.

On the other hand, the shareholders of the company obtained a yield of $ 5.11 per share during the last twelve months, compared to the $ 2.15 earned in the previous year.

The operating results (before interest and taxes) of the company that Bill Gates and Paul Allen co-founded 44 years ago were 42,959 million (22% more than the 35,058 in 2018), and the company managed to reduce its long-term debt up to 66,662 million with respect to the 72,242 with which it closed 2018.

“It has been a record fiscal year for Microsoft as a result of our agreements with leading companies in each sector, and every day we work together with our clients to help them build their digital capabilities,” he congratulated when the results were published by the CEO of the company. , Satya Nadella.

Precisely on Wednesday, a day before presenting results, the company revealed an agreement with the US communications giant AT & T, which will become its main provider of cloud services, an operation valued at more than 2,000 million dollars.

The data from the Windows creator were well received on Wall Street, where Microsoft shares were up 1.44% to $ 138.38 per share in electronic transactions after the closing of the New York switchboards.

Gary Ivenchuck

Gary is a stock trading expert and is responsible for covering technical analysis news on Logistics Business Review. Recently he has been working tirelessly to analyse stocks for our readers, and is always available to hear from people asking for stock analysis.

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