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Microsoft and Advanced Micro Devices Earnings Reports!

Wednesday, July 28, 2021

by Ian Harvey

Microsoft and Advanced Micro Devices reported earnings after the market closed yesterday.

Microsoft Corp. reported sales and profit that exceeded analysts’ estimates for a 10th straight quarter.

Meanwhile Advanced Micro Devices topped analyst expectations for the second quarter and guided higher for the current quarter and full year.



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Prelude to Microsoft and Advanced Micro Devices.....

On Monday, July 26, 2021, Members of Weekly Options USA executed trades, based on expected earnings reports due out after the market closed on Tuesday, July 27, on Microsoft and Advanced Micro Devices.  The strategy behind these short-term trades was to benefit from the build-up of the stock prices, for both Microsoft and Advanced Micro Devices, leading onto the earnings reports.

This was not to be so, as the market pulled back dramatically on Tuesday due to several catalysts, which caused our weekly trades to drop; this left the alternative of holding until after the earnings report and hopefully the reports on Microsoft and Advanced Micro Devices were excellent, therefore, regaining our lost capital and maybe gains some potential profit.

We will find out the outcome of this strategy for both Microsoft and Advanced Micro Devices after the market opens.

The Earnings Reports for Microsoft and Advanced Micro Devices

Microsoft Earnings Report.....

What was Expected.....

Wall Street expects a year-over-year increase in earnings on higher revenues when Microsoft reports results for the quarter ended June 2021, on July 27, 2021 at approximately 4:05 PM ET.

The consensus earnings estimate is for $1.90 per share on revenue of $44.07 billion; but the Whisper number is a little higher at $2.00 per share.

Consensus estimates are for year-over-year earnings growth of 30.14% with revenue increasing by 15.87%.

Microsoft, like its tech titan peer, posted blowout results last quarter as it continues to benefit from cloud computing growth, its expanding portfolio, and piles of cash that help fund its strategic acquisitions. MSFT posted 19% sales growth and 40% adjusted EPS expansion in Q3 FY21 and analysts quickly raised their outlooks for a firm that almost always beats bottom-line estimates.

Estimates call for its 2021 revenue to climb 16% to $166 billion, while FY22 sales are set to pop another 11.4%. These projections would extend its streak of between 10% to 15% sales growth to five years, a decent run, to say the least, from a company that went public in the 1980s. Meanwhile, its adjusted earnings are projected to climb 35% and 7%, respectively during this stretch.

For the last reported quarter, it was expected that Microsoft would post earnings of $1.76 per share when it actually produced earnings of $1.95, delivering a surprise of +10.80%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Short interest has decreased by 16.9% and overall earnings estimates have been revised higher since the company's last earnings release.

Microsoft Corp. reported sales and profit that exceeded analysts’ estimates for a 10th straight quarter.

Sales in the fourth quarter, which ended June 30, climbed 21% to $46.2 billion, the Redmond, Washington-based company said Tuesday in a statement. That compared with the $44.3 billion average estimate of analysts polled by Bloomberg. Net income rose to $16.5 billion, or $2.17 a share, while analysts had predicted $1.92.

The Actual Report.....

Microsoft Corp. reported sales and profit that exceeded analysts’ estimates for a 10th straight quarter, sending shares higher after some investors were initially spooked by signs of slowing growth in the software giant’s Azure cloud-computing business.

For the fiscal fourth quarter ended June 30, Microsoft posted revenue of $46.2 billion, up 21% from a year ago and ahead of analysts’ forecast of $44.1 billion. Profits were $2.17 a share, beating the Wall Street consensus of $1.90 a share.

On a call with analysts, Microsoft CFO Amy Hood said that the company sees “healthy double-digit revenue growth” for the June 2022 fiscal year.

Microsoft exceeded its own forecast in all three operating segments in its latest quarter.

Microsoft’s sales and margin forecasts, on a conference call, reassured investors about its prospects after investors became concerned over the slowing growth in the software giant’s Azure cloud-computing business. Shares gained 1.2% in extended trading after first dropping about 2.5% following the report.

People are not happy if Azure decelerates -- they’re worried the good days are over,” said Mark Moerdler, an analyst at Sanford C. Bernstein. “People seem to worry Azure will never be as big as Amazon.” Moerdler had previously written that he thinks concerns about both Azure growth and margins were overblown.

Chief Financial Officer Amy Hood said the Azure performance was better than she had forecast and said demand remains strong across all of Microsoft’s cloud businesses, including Azure, Office and Dynamics software services.

"Our results show that when we execute well and meet customers’ needs in differentiated ways in large and growing markets, we generate growth, as we’ve seen in our commercial cloud — and in new franchises we’ve built, including gaming, security, and LinkedIn, all of which surpassed $10 billion in annual revenue over the past three years,” Microsoft CEO Satya Nadella said in prepared remarks following the release of the report.

Advanced Micro Devices Earnings Report.....

What was Expected.....

Advanced Micro Devices is confirmed to report earnings at approximately 4:10 PM ET on Tuesday, July 27, 2021.

The consensus earnings estimate is for $0.54 per share on revenue of $3.62 billion; but the Whisper number is slightly higher at $0.57 per share.

Consensus estimates are for year-over-year earnings growth of 217.65% with revenue increasing by 87.37%.

For second-quarter 2021, AMD expects robust sales across all its businesses to drive year-over-year increase in revenues. Meanwhile, the sequential increase is projected to be led by growth across data center and gaming verticals.

For the last reported quarter, it was expected that Advanced Micro would post earnings of $0.44 per share when it actually produced earnings of $0.52, delivering a surprise of +18.18%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Overall earnings estimates have been revised higher since the company's last earnings release.

The Actual Report.....

Advanced Micro Devices Inc. gave a bullish third-quarter sales forecast, indicating its gaining market share from Intel Corp. in the lucrative market for server chips.

The chipmaker topped analyst expectations for the second quarter and guided higher for the current quarter and full year.

The Santa Clara, Calif.-based company earned an adjusted 63 cents a share on sales of $3.85 billion in the June quarter. Analysts had forecast AMD earnings of 54 cents a share on sales of $3.62 billion. On a year-over-year basis, AMD earnings surged 250% while sales increased 99%.

"Our business performed exceptionally well in the second quarter as revenue and operating margin doubled and profitability more than tripled year over year," Chief Executive Lisa Su said in a news release.

Chief Executive Officer Lisa Su has brought the company back from the brink of irrelevance with a raft of new products that customers see as competitive with Intel’s offerings for the first time in years.

She added, "We are growing significantly faster than the market with strong demand across all of our businesses."

AMD projected third-quarter revenue of about $4.1 billion, plus or minus $100 million, compared with analysts’ estimates of $3.82 billion

Shares of the Santa Clara, California-based company rose nearly 2% in extended trading after the chip designer also reported second-quarter revenue and profit beat above estimates.

Conclusion .....

An update as to the outcome of the trades on Microsoft and Advanced Micro Devices will be given after the market opens.



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