Pretty uneventful quarter from Microsoft (NASDAQ:MSFT):
- Goldman Sachs notes Microsoft reported first (Sept) fiscal-quarter results that were above expectations, with EPS of $0.35 vs GS $0.32 estimate. Revenue growth of 11% was above GS 8% estimate. Full-year guidance is about the same as before.
Management does not appear to have increased the range of expectations for the remaining quarters of the year, mostly just flowed through first-quarter upside. Second-quarter (December) revenue guidance is in line with firm's expectations but EPS of $0.22-$0.24 is below our $0.26 estimate, possibly reflecting both the lower accretion (smaller than originally expected Dutch Tender offer) and also perhaps some greater product launch costs. With no material changes to full-year estimates, this quarter may be less eventful than prior earnings reports.
Deferred revenues were down $810 million sequentially, not as bad as the $1.1 billion decline they had assumed. With new products upcoming, they think better news is ahead of growth, and maintain Buy rating and Conviction List Buy.
- JP Morgan notes the first quarter looks a little better than expected on cost discipline, and while the Q2 guidance was sloppy--this was largely expected. More importantly, we saw what appear to be solid bookings for Office (firm second product catalyst following the timely Vista delivery) and MSFT was able to re-affirm rev. and EPS for the year. With the Q1 hurdle behind the company, the firm continues to expect the stock to outperform as we near revenue and EPS acceleration in 2H-07.
1) Xbox units looked light and MSFT appears to be behind on its targets, 2) net the deferrals, operating margin targets for Q2 look low, 3) weak search rev. again hurt MSN, 4) unearned saw a re-allocation lines, 5) MSFT maintained PC targets for the year-despite a weaker Q1 and 6) full yr. guidance tweaks up 2H margins.
Assuming CY07E EPS of $1.63, Microsoft currently trades at 17x,a discount to the peer group, which trades at roughly 23x CY07E EPS. At current levels, they believe the stock largely discounts the risk associated with the story and represents a highly attractive risk/reward investment in several large and diverse software markets. As such, they rate Microsoft an Overweight.
Notablecalls: Not actionable but good to know category.
- Goldman Sachs notes Microsoft reported first (Sept) fiscal-quarter results that were above expectations, with EPS of $0.35 vs GS $0.32 estimate. Revenue growth of 11% was above GS 8% estimate. Full-year guidance is about the same as before.
Management does not appear to have increased the range of expectations for the remaining quarters of the year, mostly just flowed through first-quarter upside. Second-quarter (December) revenue guidance is in line with firm's expectations but EPS of $0.22-$0.24 is below our $0.26 estimate, possibly reflecting both the lower accretion (smaller than originally expected Dutch Tender offer) and also perhaps some greater product launch costs. With no material changes to full-year estimates, this quarter may be less eventful than prior earnings reports.
Deferred revenues were down $810 million sequentially, not as bad as the $1.1 billion decline they had assumed. With new products upcoming, they think better news is ahead of growth, and maintain Buy rating and Conviction List Buy.
- JP Morgan notes the first quarter looks a little better than expected on cost discipline, and while the Q2 guidance was sloppy--this was largely expected. More importantly, we saw what appear to be solid bookings for Office (firm second product catalyst following the timely Vista delivery) and MSFT was able to re-affirm rev. and EPS for the year. With the Q1 hurdle behind the company, the firm continues to expect the stock to outperform as we near revenue and EPS acceleration in 2H-07.
1) Xbox units looked light and MSFT appears to be behind on its targets, 2) net the deferrals, operating margin targets for Q2 look low, 3) weak search rev. again hurt MSN, 4) unearned saw a re-allocation lines, 5) MSFT maintained PC targets for the year-despite a weaker Q1 and 6) full yr. guidance tweaks up 2H margins.
Assuming CY07E EPS of $1.63, Microsoft currently trades at 17x,a discount to the peer group, which trades at roughly 23x CY07E EPS. At current levels, they believe the stock largely discounts the risk associated with the story and represents a highly attractive risk/reward investment in several large and diverse software markets. As such, they rate Microsoft an Overweight.
Notablecalls: Not actionable but good to know category.
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