Microsoft Falls as Quarter Results Fail to Sustain Lofty Valuation

Microsoft shares were trading weaker in Wednesday's premarket, a day after the company's disappointing March quarter results.

All in all, the stock has gained 70% since the beginning of the COVID-19 , despite already having a valuation of over $1 trillion.  At Monday's close, Microsoft traded at over 35 times 2020 earnings, a growth trend more seen in start-ups, rather than established firms. 

Nevertheless, the company demonstrated growth across all segments, including the Windows platform, cloud services, LinkedIn, XBox, Search and Surface. Microsoft revenue was $41.7 billion in the quarter through March and increased 19% from the same period a year ago. Xbox revenue growth at 34% shone through. Net income was $15.5 billion, higher by 44%. Diluted earnings per share were $2.03, rising 45%. LinkedIn revenues rose 25%. Server products and cloud services revenues rose 26% during the quarter, driven by 50% growth in revenue at Azure. 

It’s interesting to note that results came in on the day when Alphabet, some of whose businesses rival Microsoft's, posted a 34% gain in revenue to $55.31 billion, due largely to an advertising business that Microsoft doesn't boast.  For the full year, Microsoft’s advertising revenues topped $3 billion.

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