Microsoft Q1 - Nice Beat

Microsoft was one of the many tech companies to release results last week. They reported a very strong set of numbers, beating analyst expectations for both revenue and profits. The stock market is more concerned with the future than the past though. Weak guidance, due partly to a strong US Dollar and weak PC sales, meant that the stock dropped 6% after the results.

Microsoft's cloud computing division, Azure, enjoyed strong growth of 35%. As the base gets bigger, the division's expansion is starting to slow. It had growth of 40% in the previous quarter and 50% a year ago. If the US Dollar hadn't been so strong, it would have grown by 42%. The forecast is for even slower growth in the coming quarters. Analysts had hoped that Microsoft would have been able to keep ratcheting up at that higher rate for longer.

We like Microsoft because they have many products that are core to how modern businesses operate. We like that diversity. Don't forget that they also own LinkedIn - that business grew 17% last year. MS Dynamics 365 grew 22%, MS Office grew 7%, search and news advertising was up 16%, devices sold were up 2% and Xbox-linked revenue was up 3%.

This is a quality company, with very healthy profit margins and a trusted brand. The share price has been severely impacted by the current market turmoil. The important thing is to be invested in companies that can survive the market upheaval and come back stronger when the headwind becomes a tailwind. Microsoft is one of those companies.