Mister Softee Firms Up

Wow

Microsoft's blowout earnings might not ignite the S&P in Friday's trading, but they should ignite Mr. Softee. These numbers should have Steve Ballmer dancing a jig:

``This is a big deal,'' said Jane Snorek, a Minneapolis- based analyst at First American Funds, which manages $55 billion in assets, including Microsoft shares. ``It will change the sentiment on Microsoft absolutely.''

Net income increased 23 percent to $4.29 billion, or 45 cents a share, beating the 39-cent average of 15 projections in a survey by Bloomberg. Sales advanced 27 percent to $13.8 billion.

``Every division out of their five divisions exceeded expectations. They guided higher,'' said Michael Binger Bloomberg

Microsoft's stock had lulled most money managers on Wall Street to sleep, but with the stock likely to trade to levels not witnessed since 2001 tomorrow, large-cap managers underweight the stock will scramble to increase their exposure. This move might have legs, as Vista gains traction and the company's other business lines kick into gear simultaneously. Microsoft's CFO Chris Liddell called it “the best quarter since I’ve been here" adding “It was a really, really good quarter across the board; we kept costs under control, we’re getting some of the EPS benefit from the buybacks; it was no one particular thing,” Tech Trader

Business Line Growth

* Client (which includes Windows): +24.8%
* Server and tools: +16.2%
* Online services: +25.2%
* Microsoft business division (including Office): +20.2%
* Entertainment and devices (including Xbox): +90.8%.

Indeed, Liddell even crowed that anti-piracy efforts are beginning to pay off, and the swing from a loss to profits in the company’s gaming sector put those numbers at the high end of guidance. Which should result in the stock tacking on close to $40 billion in market cap as the week wraps up.

Something the current crop of young Wall Street traders have not seen since they were daytrading in their dorm rooms a decade ago.

Microsoft Shares Surge After Sales, Profit Shatter Estimates
Bloomberg

Microsoft CFO Liddell: “A Good, Clean Quarter;” Stock Soars 10% After Hours To Highest Level Since ‘01
Tech Trader
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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