It’s Microsoft earnings day: Here’s what to watch as the tech giant reports its latest numbers

(Geekwire Photo / Kevin Lisota)

It’s that time of year again: Big tech earnings season.

The action kicked off with Apple posting a record quarter yesterday, and today, fellow $1 trillion club member Microsoft is set to report its latest financials. The tech giant has been riding high thanks to its cloud division, which managed a major upset in winning the coveted JEDI cloud contract over rival Amazon in the quarter.

Analysts expect Microsoft to post earnings of $1.32 per share on revenue of $35.67 billion in the second quarter of its fiscal year. That’s an increase of 9.75 percent over the same time last year.

Microsoft stock is up 61 percent over the last year, well ahead of the larger SP 500 index that has risen 24 percent in that time frame.

Results from the nation’s biggest tech companies have become more important to the stock market as their value has risen. CNBC noted this week that the five biggest tech giants — Microsoft, Amazon, Apple, Facebook and Google — now make up a whopping 17.5 percent of the SP 500. That a tech company would reach a $1 trillion market cap was a headline-grabbing prediction as recently as a couple years ago, but now both Apple and Microsoft are comfortably over that threshold with Amazon and Google knocking on the door.

Beyond the major numbers, here are a few things we’ll be watching when Microsoft reports its financials later today:

Will cloud be king again? In July, Microsoft’s main cloud unit surpassed each of the tech giant’s other major divisions in revenue for the first time. The following quarter, the Intelligent Cloud division trailed the other two main wings of the company: Productivity and Business Processes and More Personal Computing. Will the cloud division become the company’s leading revenue driver going forward, or was it a one-time thing? And as always, we’re wondering if Microsoft will finally break out Azure revenue this quarter (not likely).

Return of the JEDI: Microsoft in November beat out heavy favorite Amazon for the coveted 10-year, $10 billion contract to rebuild the Pentagon’s tech infrastructure. Amazon challenged the decision and is trying to get the court to bar Microsoft from working on the project until the lawsuit plays out.

Microsoft has reportedly begun hiring for the massive project. Will executives have anything to say about the project or Amazon’s lawsuit that seeks to reopen the process?

Hardware reinforcements on the way: Microsoft announced some major hardware products this quarter that could give a boost to the company’s Surface and gaming divisions. Microsoft promised the next-generation Xbox will be the “fastest, most powerful console ever,” while the Surface Duo and Neo devices put the tech giant on the cutting edge of the foldable gadget trend.

But those won’t come out until later this year. Microsoft in October launched the trail of its Project xCloud game streaming service, which aims to build a broader global gaming audience that goes beyond the console. The Surface team unveiled several new and updated gadgets in October that made their debut in time for the 2019 holiday season.

Here are a few of the other highlights from the quarter:

  • Microsoft inked several new partnerships and strengthened other alliances. In the quarter, Microsoft announced the first product to come out of its 5G relationship with ATT; solidified its complex relationship with Salesforce; reunited with Nokia, five years after Microsoft’s $7 billion ill-fated acquisition of its smartphone business; and inked a three-year deal with long-time ally SAP to help companies move their data to the cloud.
  • Microsoft Teams hit 20 million daily users in November, and its rivalry with Slack is hotter than ever. In response to Microsoft’s announcement, Slack made the case that a big chunk of those 20 million people don’t actually use Teams very much.
  • The tech giant’s security wing was busy. On the last day of the year, the tech giant got a court order to seize 50 websites used by a hacker group with ties to North Korea that targeted government employees, universities, human rights organizations and nuclear proliferation groups in the U.S., Japan and South Korea. Microsoft also discovered a hacking group with ties to the Russian government targeted sporting organizations ahead of the 2020 Olympic Games in Tokyo.
  • Microsoft’s Ignite 2019 enterprise tech conference in November was full of new feature announcements. The company unveiled new capabilities for Cortana to read email and other communications, overhauled the Yammer social media app and showed off new innovations in storage and quantum computing. 

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