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3 Large Caps Announce Earnings

- By Alberto Abaterusso

These three large caps announced quarterly results after the closing bell on Wednesday.

Shares of Microsoft Corp. (MSFT) rose 3.47% to $129.35 in after-hours trading on Wednesday after beating consensus estimates on GAAP earnings for the third quarter of fiscal 2019 by 14 cents, posting $1.14 per share or a 20% upside from the prior-year quarter.


Revenue increased 14.1% to $30.6 billion, beating expectations by $740 million.

The Intelligent Cloud segment grew 24% to $9.65 billion in constant currency with Azure gaining an impressive 75% and the Productivity and Business Processes segment went up 15% to $10.24 billion with Office Commercial up 14%, Office Consumer increasing 10% and LinkedIn up 29%.

The More Personal Computing segment increased 9% to $10.68 billion with Windows OEM revenue up 9%, Windows Commercial growing 20%, Surface gaining 25% and Gaming up 7%. Search ad revenue excluding traffic acquisition costs also went up 14%.

The operating income increased 25% to $10.3 billion. The company used $7.4 billion for payment of dividends and share repurchases.

Shares of Microsoft Corp. closed at $125.01 on Wednesday for a market capitalization of $959.1 billion. The stock has risen 33% over the 52 weeks through April 24 to above the 200-, 100- and 50-day simple moving average lines. The closing price on Wednesday was 35.2% above the 52-week low of $92.45 and 0.7% below the 52-week high of $125.85.

Facebook Inc. (FB) soared 7.56% to $196.38 per share in after-hours trading on Wednesday after beating consensus estimates on non-GAAP earnings for the first quarter of fiscal 2019 by 26 cents, posting $1.89 per share. GAAP earnings were 85 cents per share, a 50% fall year over year.

Revenue came in at $15.08 billion, up 26%, beating consensus estimates by $110 million. Advertising revenue grew 26% to $14.9 billion thanks to a 91% boost in Mobile advertising revenue which made up 93% of the total.

As a result of $3 billion legal expense charge tied to the ongoing Federal Trade Commission inquiry, costs and expenses jumped 80% to $11.76 billion causing 39% drop in operating income to $3.3 billion, 2,400 basis points fall in the operating margin to 22%. For the same reason, the net income tumbled 51% to $2.43 billion.

Among other relevant figures, Facebook also recorded 1.56 billion average daily active users, up 8%, and 2.38 billion monthly active users, an 8% increase.

Capital expenditures grew 41% to $3.96 billion. Cash on hand and short-term securities totalled $45.24 billion at March 31, up 10% sequentially. The company also reported that the headcount increased 36% year over year to 37,773 in the first quarter of 2019.

The stock was $182.58 at close on Wednesday for a market capitalization of $521.4 billion. Facebook climbed 5% over the past year to above the 200-, 100- and 50-day simple moving average lines. The closing price on Wednesday was 48.4% above the 52-week low of $123.02 and 19.7% from the 52-week high of $218.62.

Shares of Visa Inc. (NYSE:V) were 0.3% lower to $161.01 in after-hours trading on Wednesday, even though the company beat analysts' expectations on GAAP earnings for the second quarter of fiscal 2019 by 7 cents, having issued $1.31 per share, up 17% year-over-year.

Posting $5.49 billion, revenue was up 8.3% from the prior-year quarter, beating consensus estimates by $30 million. The growth was driven by an 8% increase in payments volume, 4% jump in cross-border volume and 11% rise in processed transactions.

Net revenue growth was hurt by exchange rate shifts by approximately 1.5 percentage points, while the adoption of the new revenue accounting standard contributed to the growth with a 0.8 percentage points increase.

Cash from operations was $2.064 billion, almost 27% lower than in the prior-year quarter. The adjusted free cash flow was $1.91 billion. The company allocated $2.6 billion for dividends payment and share repurchases.

For full fiscal 2019, the company forecasts a low double-digit growth in revenue, a mid-single digit growth in GAAP expenses and mid-to-high single digit increase in non-GAAP expenses. Client incentives as a percentage of gross revenues is anticipated at approximately 22% and the effective tax rate at 20%.

Further, Visa expects GAAP earnings per diluted share of class A common stock growth in the mid 20-cent range, and non-GAAP earnings per diluted share grwoth in the high end of the mid-teens .

Shares of Visa Inc. closed at $161.49 on Wednesday for a market capitalization of $365.72 billion. The stock climbed 27% over the 52 weeks through April 24 to above the 200-, 100- and 50-day simple moving average lines. The closing price on Wednesday was 32.8% above the 52-week low of $121.60 and just 0.33% from the 52-week high of $162.03.

Disclosure: I have no positions in any security mentioned.

This article first appeared on GuruFocus.