Redmond’s Microsoft sales soar amid cloud strength, shares slump on valuation concern

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Redmond’s Microsoft sales soar amid cloud strength, shares slump on valuation concern

Late on Tuesday, Microsoft Corp., the Redmond, Washington-headquartered American multinational tech conglomerate which had shifted its focus into cloud-based services back in the 2014s under leadership of Chief Executive Satya Nadella, had posted its quarterly earnings’ report for fiscal third quarter of the year that ended on March 31, while Microsoft Corp’s first-quarterly earnings and sales had topped analysts’ estimate by a wider margin, though the company’s shares’ prices was last trading 2.48 per cent lower to $255.48 per share on late-afternoon US trading hour on Wednesday after falling as much as 2.77 per cent in pre-market trading amid frets of overvaluation in a high-flying US money market.

In point of fact, Microsoft Corp.’s fairly upbeat quarterly profit in the latest quarter ending on March 31, was almost entirely prodded by a boom in sales of cloud computing, while an expansion of its Teams collaboration service alongside LinkedIn social network had turned the Redmond-based Silicon Valley’s scintillating star into one of the world’s most valuable company having had a market cap close to $2 trillion.

Microsoft Corp. reports upbeat quarterly earnings, sales, but shares plunge

Aside from that, according to Microsoft Corp.’s quarterly earnings’ report for Q1, 2021, the tech tycoon’s net income over fiscal third quarter that ended on March 31, soared as much as 44 per cent to $15.5 billion compared to the same time a year earlier, while the Washington-based tech behemoth’s revenues and earnings’ per share on an adjusted basis rose to $41.7 billion and $1.95 a share respectively, beating an analysts’ estimate of a revenue of $41.03 billion and an earnings’ per share of $1.78.

Sales of Microsoft Corp’s cloud-based services including Microsoft Azure alongside its cloud version of Office 365 ramped up 33 per cent to $17.7 billion on an annualized basis. Meanwhile, since Microsoft Corp’s operational profit on latest quarter had included a $620 million in tax benefits in India, addressing to the one-off tax break, an equity analyst at Hargreaves Lansdown, Nicholas Hyett said following the announcement, “One-off tax and currency advantages have boosted Microsoft’s third-quarter numbers, and as a result the market isn’t being quite as welcoming of expectation-beating numbers as you might expect.

That is the danger of trading on the kind of valuation Microsoft enjoys, 32.8 times next year’s earnings. Disappoint even a little and the market will be unforgiving.