Hedge Fund Exposure to Microsoft: Will It Pay Off?
Microsoft has a good quarter
Microsoft (MSFT) reported its fiscal 3Q15 results on April 23, 2015. The company posted revenue of $21.73 billion and non-GAAP (generally accepted accounting principles) earnings per share of $0.61 per share, beating analyst expectations by $670 million and $0.10 per share, respectively. Microsoft stock surged on the news.
MSFT’s commercial segment’s revenue grew by 5% YoY (year-over-year), and its devices and consumer segment’s revenue surged by 8% YoY.
The strong US dollar continued to impact Microsoft’s performance. Its GAAP revenue growth increased by 9% YoY in constant currency terms, but in actual dollar terms, it grew by only 6% on a YoY basis. For more on this topic, read Microsoft’s Fiscal 3Q15 Results Beat Expectations.
Microsoft’s position in cloud space
In its earnings release, Microsoft notes that cloud computing will remain the focal point of its strategy going forward. The company points out that Microsoft Azure and Microsoft Office 365 revenues almost doubled. And this can be considered a positive sign for the company’s ongoing transition from hardware to the cloud space.
According to a report from Synergy Research Group, and as the above chart shows, Amazon (AMZN) remains the unrivaled leader in the cloud space, followed by Microsoft, which registered 96% YoY (year-over-year) growth. This growth is more than any of the top five players in the cloud space. IBM (IBM), Google (GOOG), and Salesforce (CRM) round out the top five in this space.
For portfolio exposure to MSFT, investors can consider the Technology Select Sector SPDR Fund (XLK), which invests 9.61% of its holdings in Microsoft.
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