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    Microsoft Corp (MSFT)

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    Business Description

    Microsoft is a technology company that develops and supports a wide range of software, services, devices, and solutions aimed at empowering individuals and organizations globally. Their offerings include cloud-based solutions, operating systems, productivity and collaboration applications, server applications, business solutions, desktop and server management tools, software development tools, and video games. They also design and sell devices such as PCs, tablets, gaming consoles, and related accessories .

    1. Intelligent Cloud - Drives substantial growth with Azure and other cloud services, including server products and cloud services .
    2. Productivity and Business Processes - Includes Office 365 and LinkedIn, with Office Commercial products and cloud services showing consistent growth .
      • LinkedIn - Comprises talent solutions, advertising, sales insights, and premium consumer services, contributing significantly to the segment .
    3. More Personal Computing - Encompasses Windows, devices, and Xbox, with notable revenue increases in Xbox content and services, particularly after the Activision Blizzard acquisition .

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Satya NadellaChairman and Chief Executive OfficerFeb 2014Satya Nadella is the Chairman and Chief Executive Officer of Microsoft Corporation. He became CEO in February 2014 and Chairman in June 2021. He joined Microsoft in 1992 .
    Judson B. AlthoffExecutive Vice President and Chief Commercial OfficerJul 2021Judson B. Althoff is the Executive Vice President and Chief Commercial Officer at Microsoft. He joined Microsoft in March 2013 and was appointed to his current role in July 2021 .
    Kathleen T. HoganExecutive Vice President and Chief Human Resources OfficerJun 2023Kathleen T. Hogan is the Executive Vice President and Chief Human Resources Officer at Microsoft. She joined Microsoft in 2003 and was appointed to her current role in June 2023 .
    Amy E. HoodExecutive Vice President and Chief Financial OfficerMay 2013Amy E. Hood serves as the Executive Vice President and Chief Financial Officer at Microsoft. She was appointed CFO in May 2013 and became Executive Vice President in July 2013 .
    Takeshi NumotoExecutive Vice President and Chief Marketing OfficerOct 2023Takeshi Numoto is the Executive Vice President and Chief Marketing Officer at Microsoft. He joined Microsoft in 1997 and was appointed to his current role in October 2023 .
    Bradford L. SmithVice Chair and PresidentSep 2021Bradford L. Smith is the Vice Chair and President of Microsoft. He joined Microsoft in 1993 and was appointed to his current role in September 2021 .
    Christopher D. YoungExecutive Vice President, Business Development, Strategy, and VenturesNov 2020Christopher D. Young serves as the Executive Vice President, Business Development, Strategy, and Ventures at Microsoft. He joined Microsoft in November 2020 .

    Questions to Ask Management

    1. Given the significant capital expenditure growth required to meet AI infrastructure demand, can you elaborate on how you plan to balance these investments with expected revenue growth, and when we might see CapEx growth align more closely with cloud revenue growth?

    2. With the rising costs of training large AI models and your substantial investments in OpenAI, how do you manage the financial impact of these investments on your margins, especially considering the $1.5 billion expected loss reflected in your other income and expense line?

    3. Considering the external constraints like data center capacity and power availability that you've faced due to rapid AI demand growth, what steps are you taking to mitigate these challenges and ensure sustainable expansion without compromising on environmental commitments?

    4. As you build out your AI business towards a $10 billion annual revenue run rate, can you provide more clarity on the monetization strategies for AI products like GitHub Copilot and M365 Copilot, and how they contribute to your top-line growth versus the costs involved in providing these services?

    5. Given the reported growth in gaming and the record performance of titles like Call of Duty Black Ops 6, which was the biggest Call of Duty release ever, how do you plan to sustain this momentum in the gaming division, and what are the implications for your broader strategy, especially in integrating gaming with your AI and cloud services?

    Share Repurchase Program

    Program DetailsProgram 1Program 2
    Approval DateSeptember 14, 2021 September 16, 2024
    End Date/DurationNo expiration date No expiration date
    Total additional amount$60.0 billion $60.0 billion
    Remaining authorization$7.5 billion Not applicable yet
    DetailsMay be terminated at any time Will commence after Program 1 completion

    Debt Maturity Schedule

    YearAmount Due (in billions)Debt TypeInterest Rate (%)% of Total Debt
    20252.25 Current portion of long-term debtN/A4.4% = (2.25 / 51.138) * 100
    20263.00 2015, 2016, 2023, 2024 issuances2.40 – 4.50 5.9% = (3.00 / 51.138) * 100
    20279.25 2015, 2016, 2017 issuances3.30 – 4.50 18.1% = (9.25 / 51.138) * 100
    20280.00 Euro-denominated 2013 issuance2.63 – 3.13 0.0% = (0.00 / 51.138) * 100
    20291.81 2015, 2016 issuances2.70 – 4.75 3.5% = (1.81 / 51.138) * 100
    2030–206234.83 Various issuances (2009–2024)1.35 – 5.49 68.1% = (34.83 / 51.138) * 100

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • Apple: Distributes versions of its pre-installed application software through its PCs, tablets, and phones .
    • Cisco Systems: Uses its position in enterprise communications equipment to grow its unified communications business .
    • Google: Provides a hosted messaging and productivity suite .
    • Meta: Offers communication tools to enable productivity and engagement within organizations .
    • Proofpoint: Provides security solutions across email security, information protection, and governance .
    • Symantec: Provides security solutions across email security, information protection, and governance .
    • Slack: Provides teamwork and collaboration software .
    • Zoom: Offers videoconferencing and cloud phone solutions .
    • Oracle: Competes with Dynamics in cloud-based and on-premises business solutions .
    • Salesforce: Competes with Dynamics in cloud-based and on-premises business solutions .
    • SAP: Competes with Dynamics in cloud-based and on-premises business solutions .
    • Service Now: Competes with Dynamics in cloud-based and on-premises business solutions .
    • UI Path: Competes with Dynamics in cloud-based and on-premises business solutions .
    • WorkDay: Competes with Dynamics in cloud-based and on-premises business solutions .

    Auditor

    NameStart DateEnd DateReason for Change
    Deloitte & Touche LLP1983 PresentCurrent auditor

    Latest news

    Recent developments and announcements about MSFT.

    Financial Reporting

      Earnings Call

      ·
      6 days ago

      Summary of Microsoft's Q2 Earnings Call

      Key Financial Highlights

      • Revenue: $69.6 billion, up 12% year-over-year.
      • Earnings Per Share (EPS): $3.23, an increase of 10%.
      • Microsoft Cloud Revenue: $40.9 billion, up 21% year-over-year.
      • AI Business: Annual revenue run rate surpassed $13 billion, growing 175% year-over-year.
      • Commercial Bookings: Increased 67% (75% in constant currency), driven by Azure commitments, including OpenAI.

      Forward Guidance

      • Azure Revenue Growth: Expected to grow between 31% and 32% in Q3, driven by AI services.
      • Operating Margins: FY '25 operating margins expected to increase slightly year-over-year.
      • Capital Expenditures: Q3 and Q4 spend to remain consistent with Q2 levels, with a shift toward short-lived assets in FY '26.

      Strategic Initiatives and Market Conditions

      • AI and Cloud: Strong demand for AI and cloud services, with significant investments in scaling AI infrastructure.
      • Copilot Adoption: Rapid growth in Microsoft 365 Copilot, with customers like Novartis and Barclays purchasing thousands of seats. Usage intensity increased 60% quarter-over-quarter.
      • Gaming: Xbox Game Pass set a new revenue record, with PC subscribers growing over 30%.
      • LinkedIn: Premium subscriptions surpassed $2 billion in annual revenue, with subscriber growth up nearly 50% over two years.

      Analyst Questions and Management Responses

      • AI Revenue Growth: Analysts highlighted the faster-than-expected growth in AI revenue, driven by Azure AI and Microsoft Copilot. Management attributed this to strong adoption and pricing per seat.
      • Commercial Bookings Strength: Analysts noted a record $39 billion sequential increase in commercial RPO. Management emphasized broad-based growth across Azure commitments and core motions like renewals and upsells.
      • CapEx and OpenAI Partnership: Management reiterated their commitment to a fungible fleet strategy, balancing training and inference investments while optimizing costs.

      Key Takeaways

      • Microsoft continues to see robust growth in its cloud and AI businesses, with strong adoption of AI-driven tools like Copilot.
      • The company is investing heavily in AI infrastructure to meet growing demand, while maintaining a focus on operational efficiency.
      • Forward guidance reflects confidence in sustained growth, particularly in AI and cloud services, despite some execution challenges in non-AI Azure services.

      Earnings Report

      ·
      6 days ago

      Microsoft Corporation has released its earnings results for the fiscal quarter ended December 31, 2024. Below are the key highlights from the report:

      Financial Performance

      • Revenue: $69.6 billion, an increase of 12% year-over-year.
      • Operating Income: $31.7 billion, an increase of 17% (16% in constant currency).
      • Net Income: $24.1 billion, an increase of 10%.
      • Diluted Earnings Per Share (EPS): $3.23, an increase of 10%.

      Segment Performance

      1. Productivity and Business Processes:

        • Revenue: $29.4 billion, up 14% (13% in constant currency).
        • Key drivers:
          • Microsoft 365 Commercial products and cloud services: Revenue increased 15%, driven by 16% growth in Microsoft 365 Commercial cloud revenue.
          • LinkedIn: Revenue increased 9%.
          • Dynamics products and cloud services: Revenue increased 15%, with Dynamics 365 growing 19% (18% in constant currency).

      2. Intelligent Cloud:

        • Revenue: $25.5 billion, up 19%.
        • Key drivers:
          • Server products and cloud services: Revenue increased 21%, driven by 31% growth in Azure and other cloud services.

      3. More Personal Computing:

        • Revenue: $14.7 billion, relatively unchanged.
        • Key drivers:
          • Windows OEM and Devices: Revenue increased 4%.
          • Xbox content and services: Revenue increased 2%.
          • Search and news advertising: Revenue increased 21% (20% in constant currency).

      Microsoft Cloud Performance

      • Microsoft Cloud Revenue: $40.9 billion, up 21% year-over-year.
      • AI Business: Surpassed an annual revenue run rate of $13 billion, growing 175% year-over-year.

      Shareholder Returns

      • Microsoft returned $9.7 billion to shareholders through dividends and share repurchases during the quarter.

      Key Trends and Outlook

      • The company emphasized its focus on AI innovation and cloud infrastructure investments to capture future opportunities.
      • Forward-looking guidance will be provided during the earnings conference call scheduled for 2:30 p.m. Pacific Time on January 29, 2025.

      For more details, the full earnings report and webcast replay are available on Microsoft's Investor Relations website.

    Corporate Leadership

      Leadership Change

      ·
      Jan 22, 2025, 10:45 PM

      Who is leaving? Christopher D. Young, Executive Vice President of Business Development, Strategy, and Ventures at Microsoft, has resigned effective immediately. He will remain with the company until the end of March to assist with the transition.

      Why? No specific reason for the resignation was disclosed.

      Who is stepping up? The document does not mention a replacement or interim leader for his role.