Microsoft Corp.’s earnings easily surpassed estimates on Tuesday, but shares still fell in after-hours trading following a string of record closing prices, APA reports citing Market Watch.
Microsoft MSFT, +0.16% on Tuesday reported fiscal third-quarter earnings of $15.46 billion, or $2.03 a share, up from $1.40 a share a year ago, with profit buttressed by a $620 million net income-tax benefit. Without that tax gain, Microsoft would have reported earnings of $1.95 a share, still ahead of estimates. Revenue for the quarter was $41.7 billion, up from $33.06 billion in the same quarter last year.
Analysts on average expected earnings of $1.78 a share on sales of $41.04 billion, according to FactSet. Shares fell more than 3% in after-hours trading immediately following the release of the report, though those losses lessened later in the extended session, after Microsoft issued quarterly guidance that beat analyst estimates.
Analysts suggested Tuesday afternoon that Wall Street expected a bigger revenue beat from Microsoft, with Evercore ISI analysts writing in a note that “the top line beat was perhaps a bit below buy-side expectations,” and Wedbush analyst Dan Ives writing that the stock was “selling off after-hours in knee-jerk fashion as the Street was hoping for a bigger top-line beat.”
The stock had closed at a record high for a third consecutive session, with a 0.2% daily gain to $261.97. Microsoft stock is on track for its sixth consecutive positive month, which would be its strongest run since an eight-month streak that ended in January 2020.
Microsoft shares have largely been trading at or near record highs for months, amid strong gains for personal-computer sales, collaboration software and cloud-computing adoption during the COVID-19 pandemic. In the holiday season, Microsoft surpassed $40 billion in quarterly sales and $15 billion in quarterly profit for the first time, pushing shares to a then-record; it repeated the performance in the first calendar quarter of 2021, though revenue came up short of the record holiday-quarter sales.