Analysts’ estimates for Microsoft’s fiscal 4Q16 earnings
Microsoft (MSFT) is scheduled to release its fiscal 4Q16 and 2016 earnings after the Market closes on July 19, 2016. For fiscal 4Q16, Estimize expects Microsoft to report revenue of $22.1 billion and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $0.58. Estimize is a financial estimate platform where industry analysts share their expectations for companies’ results.
In fiscal 3Q16, Microsoft reported revenues and non-GAAP EPS of $22.1 billion and $0.62 per share, respectively. Although Microsoft’s revenue was in line with analysts’ expectations, its EPS failed to meet estimates by $0.02 per share.
Factors that affect Microsoft’s growth
Through its “mobile-first, cloud-first” strategy, Microsoft is trying to diversify its offerings and businesses, but it’s still dependent on the PC (personal computing) space because its MPC (More Personal Computing) segment draws close to ~50% of total revenues from the PC market.
After hitting an eight-year low in 2015, global PC shipments continued to fall in 2016. However, compared to the ~10% fall in 1Q16, global PC shipments fell ~5% in 2Q16. We’ll discuss global PC shipments in 2Q16 later in this series.
Despite the fall in the PC market, Microsoft continues to keep its focus on this space as PC continues to be the most important gaming platform. Read Why Is Microsoft Keen on the PC Market despite Its Softness? to learn more.
Microsoft has announced several strategic acquisitions, including the recent LinkedIn (LNKD) acquisition, to expand and diversify its businesses and reduce its dependence on the PC market. Its peers IBM (IBM) and Oracle (ORCL) are also pursuing strategic buyouts to strengthen their presence in the rapidly growing cloud space. A KPMG survey showed that technology is expected to be the most active sector for consolidation, or mergers and acquisitions, in 2016.
In the next part of this series, we’ll take a closer look at the role of the PC market in Microsoft’s overall growth.