by Mike Wheatley
Microsoft Corp. surpassed expectations for its third-quarter financial results today, but its stock moved sideways in the after-hours trading session after it told investors it’s going to bump up its capital expenditures to $190 billion this year.
The company reported earnings before certain costs such as stock compensation of $4.27 per share, easily beating the analyst consensus estimate of $4.06. Revenue for the period increased 18% from the previous year, to $82.89 billion, ahead of Wall Street’s $81.39 billion target. All told, the company reported net income of $31.78 billion, up from $25.82 billion one year earlier.
However, Chief Financial Officer Amy Hood disappointed investors when she called for fourth-quarter revenue of between $86.7 billion and $87.8 billion. The midpoint of that forecast, at $87.25 billion, trailed the Street’s $87.53 billion consensus estimate. The estimate also implies that Microsoft’s operating margin will drop to 44% from 46.3% in the previous quarter, below the Street’s 44.6% target.
Hood blamed the shortfall on rising component costs and the instability in the Middle East, yet she revealed that the company is not letting these developments get in the way of its long-term ambitions in the artificial intelligence industry. She said the company anticipates spending $190 billion on capex this year, up 61% from the year before.
