Microsoft sales rise on strength of cloud service and computer sales

Liam Roche
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Microsoft sales rise on strength of cloud service and computer sales

Microsoft’s income for Q3 rose by 44% year-on-year to $15.5bn

Microsoft (NASDAQ:MSFT) has confirmed that it met its expected sales for the quarter while it exceeded profit forecasts.

The company, founded by Bill Gates and Paul Allen in 1975, is now one of the most valuable companies in the world, worth nearly $2trn, as its share price soared over the past year. This was thanks to it securing market share in the growing cloud computing, as well as in other areas, including its Teams collaboration service.

Such services saw raised demand during lockdowns, as Microsoft’s Azure cloud service made up ground on the market leading Amazon Web Services by growing by 50% over the last quarter.

Many people working or studying from home made the decision to buy new PCs, which caused an upturn in the Microsoft Windows operating system and video game businesses.

Net income for Q3 ended in March rose by 44% year-on-year to $15.5bn. Revenue and adjusted earnings per share were $41.7 billion and $1.95 per share, above analysts’ estimates of $41.03 billion and $1.78 per share.

Ben Barringer, equity research analyst at Quilter Cheviot commented on Microsoft’s results:

“Microsoft posted a good set of numbers, largely in line with expectations, with 16% revenue growth over the quarter primarily as a result of its cloud business, which increased revenue by over 46%. Although Microsoft’s cloud platform Azure did experience a slight reduction in growth after the 48% increase posted in the previous quarter, it is still ahead of expectations.”

“Looking forward, Microsoft has phenomenal revenue resilience with plenty of revenue streams including Teams, Azure, LinkedIn, gaming, security, business analytics, AI and many more. The business should be buoyed by increased global spending on technology, which is expected to increase from around 5% of GDP to 10%, with cloud penetration also expected to increase from 20% to 80% in the years ahead.”

FTSE 100 boosted by decent gains from BP, Shell and Lloyds

Liam Roche
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0
FTSE 100 boosted by decent gains from BP, Shell and Lloyds

Boosted by decent gains for BP and Shell, and a 3.3% surge from Lloyds – which posted Q1 pre-tax profit of £1.9 billion against the £74 million seen this time last year – the FTSE 100 climbed 0.6% after the bell. That still, however, wasn’t enough to lift the UK index back to 7,000, instead leaving it 30 points short of that landmark level.

“Europe displayed no signs of the pre-press conference cautiousness that often clouds Fed Wednesdays, instead striving to recover Tuesday’s losses,” said Connor Campbell, financial analyst at Spreadex.

In the Eurozone, even with Deutsche Bank rising 5.4%, the DAX could only manage a 0.3% increase, keeping the German bourse 10 points adrift of 15,300. As for the CAC, a 0.4% jump sent it above 6,230, around 20 points off last week’s highs.

“If the European markets were ignoring the tension of a Fed Wednesday, the Dow Jones certainly isn’t. The futures point to a 0.1% decline from the index when trading gets underway Stateside, pushing it the wrong side of 33,950,” Campbell added.

“Though the broad consensus is that Jerome Powell and the rest of the FOMC will keep things unchanged this evening, there have been some reports suggesting that the topic of tapering bond purchases could be broached. If that is the case, then the markets could be about to end April on a bum note.”

FTSE 100 Top Movers

Lloyds (3.28%), WPP (2.84%) and Persimmon (1.92%) are the top movers at mid-morning on the FTSE 100.

At the other end, Fresnillo (-3.29%), Sainsburys (-2.23%) and Reckitt Benckiser (-1.86%) have made the biggest falls so far today.

Lloyds

Lloyds saw its profits soar during Q1 as a more positive outlook allowed the bank to reverse some of provisions it had made for loan losses following the spread of coronavirus.

The FTSE 100 bank followed in the footsteps of HSBC earlier in the week by writing back some of last year’s losses. A number of banks took large forward-looking provisions around the beginning of the pandemic, although defaults have stayed low, thanks in part to government support.

Director Dealings: Eleco PLC

Jon Levinson
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0
Director Dealings: Eleco PLC

Eleco plc (AIM: ELCO), the AIM-listed construction software specialist, announces that it was informed on 27 April 2021 that on 26 and 27 April 2021, Kevin Craig, Non-Executive Director of the Company, purchased 60,000 ordinary shares of 1 pence each in the capital of the Company ("Ordinary Shares") 30,000 Ordinary Shares at a price of 108 pence per Ordinary Share and 30,000 Ordinary Shares at a price of 110 pence per Ordinary Share, respectively (together, the "Purchase").
"My latest investment is a sign of confidence in the business, its trajectory, its leadership, its progress to date ...

Santander profits surge 61%

Liam Roche
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0
Santander profits surge 61%

Santander to close 111 branches by August 2021

Santander (LON:BNC) announced its pre-tax profit rose by 61% in Q1 in what the bank described as a “strong” set of results.

The bank’s profit rose to £184m, up from £114m, over the three month period.

Santander also said that its return on tangible equity (RoTE) more than doubled to 9.4%, up from 4.3%.

Wednesday’s results arrive just a month after the bank, which falls under the umbrella of Spanish bank Santander, confirmed it would be closing over 100 of its branches across the UK, by the end of August 2021.

At is a move being replicated across the sector as other banks seek to reduce their sites in order to adapt to consumer demand. Up to 840 staff members will be affected by Santander’s decision.

Commenting on the results, chief executive Nathan Bostock, who will leave the firm he has run since 2014 at the end of the year, said:

“This is a strong set of results which demonstrates the progress we are making in transforming the bank for the future and reflects the strategic decisions we have taken,” he said.

“As the UK begins to emerge from the pandemic, our priority continues to be to support customers, colleagues and communities at what remains a difficult time for many.”

“Although the economic outlook is more positive, market conditions will remain uncertain given the low interest rate environment and the lasting impacts of the pandemic.”

“We plan to succeed by continuing to focus on delivering an excellent customer experience, while further simplifying how we operate and improving our digital capability.”

Lloyds records £1.9bn profit as bank reverses loan provisions

Liam Roche
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0
Lloyds records £1.9bn profit as bank reverses loan provisions

António Horta-Osório set to leave as chief executive of Lloyds

Lloyds (LON:LLOY) saw its profits soar during Q1 as a more positive outlook allowed the bank to reverse some of provisions it had made for loan losses following the spread of coronavirus.

The FTSE 100 bank followed in the footsteps of HSBC earlier in the week by writing back some of last year’s losses.

A number of banks took large forward-looking provisions around the beginning of the pandemic, although defaults have stayed low, thanks in part to government support.

Lloyds confirmed it has made a profit before tax of £1.9bn for the quarter ending in March, well up from below £100m for the same period a year ago.

The improvement can be mostly put down to a drop in bad debt provisions. Lloyds reported a net impairment credit of £323m, compared with a £1.4bn charge in the first quarter of 2020.

The group’s revenues fell by 7% compared to the year before to £3.7bn, while the fall was still below what analysts had expected, the Financial Times reported.

Chief executive António Horta-Osório, who is set to leave to become chairman of Credit Suisse, said the pandemic “continues to have a significant impact on people”, but added that “the long-run transformation of the group has positioned the business well to address the challenges”.

He is being replaced by the HSBC banker Charlie Nunn, who will take over at Lloyds on 16 August. The chief financial officer, William Chalmers, will act as chief executive in the interim.

Alphabet doubles profit as online advertising surges during pandemic

Liam Roche
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0
Alphabet doubles profit as online advertising surges during pandemic

Alphabet makes more money from digital advertising than any other company

Alphabet (NASDAQ:GOOGL), the owner of Google and YouTube, has more than doubled its profits as firms spent money on online advertising to get the attention of people working and playing online during the pandemic.

The company said it managed to surpass analysts’ expectations because of “elevated consumer activity online”.

Alphabet‘s revenues rose by 34% to $55.31bn in Q1, a new record, while its net profits increased to $17.93bn. Its share price could open at a new high today, The Times reported, after it jumped by 3.7% to $2,375 during after-hours trading.

The company’s valuation stands at $1.5trn, as it makes more money from digital advertising than any other company, selling space on Youtube, Google and its other websites.

Sales within the company’s Google search business increased by 30% to $31.88bn, while Youtube ad revenues rose by 49% to $6.01bn. Its rapidly-growing cloud computing division has seen a 46% jump in sales, getting to $4.05bn.

Alphabet’s board has confirmed it has given the go-ahead for a $50bn share buyback programme. The news has come as the company faces up to increasing pressure from regulators over its market dominance.

Very testing times for Abingdon Health

Jon Levinson
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1
Very testing times for Abingdon Health

Abingdon Health (AIM: ABDX)
54p (51p-57p)
Mkt Cap £52m
Next Results: Finals to June
Abingdon Health (LSE: ABDX) not long ago reported its Interims to December which were in-line with expectations with an operating loss of £0.06m from revenue of £7.7m (up over 100% like for like) with a Gross Profit Margin of 40%. Since that report in early March todays  Trading Statement was a shock, as the finals to the end of June, are already expected to be‘substantially below expectations.’
It was reported that whilst each of the opportunities at the time of the interims remains in...

Premier Inn has cause for optimism as staycations look set to boom

Liam Roche
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0
Premier Inn has cause for optimism as staycations look set to boom

‘Anywhere with a beach or a view’ all but fully booked for the summer says Premier Inn CEO

Premier Inn (LON:WTB) is enjoying a surge in bookings as Brits settle for staycations over the summer holidays.

The prospect of guests booking every room out at 15% of its over 800 hotels located in touristy destinations is welcomed news after the pandemic caused Whitbread, the owner of Premier Inn, to fall to a full-year loss of £1bn.

Alison Brittain, the Whitbread chief executive, said that the financial year ended in February 25 had been one of the most difficult in its nearly 300 year history, however she as he said that the FTSE 100 company was in a good position to capitalise as restrictions are lifted across the country.

While its hotels will be fully opened from May 17, Brittain said that “anywhere with a beach or a view” was all but fully booked for the summer.

The Premier Inn CEO said the magnitude of the pent-up demand has caused people to think far in advance.

“We opened up the bookings for Cheltenham 2022 a year in advance and we were fully booked within 48 hours at all our hotels within quite a wide mileage. This shows that people are thinking ahead to things they have missed out on during the pandemic,” she said.

Amisha Chohan, equity research analyst at Quilter Cheviot commented further on the results:

“The pandemic pain is temporary, and the business will be one of the big beneficiaries of the post-lockdown bounceback and staycation boom. In fact, in the second half of 2020, the group was successful in winning market-share, suggesting the market has become more concentrated as competitors were forced to exit the market.”

“Premier Inn, in particular, is primed to take advantage of a ‘leisure bounce’ and could be an interesting recovery play once the economy springs back to life. The hotel chain will emerge from the crisis stronger, opening between 2-3,000 rooms in the UK and 2,000 in Germany, and will see an upside from the acceleration of the vaccine rollout in the UK and across Europe,” Chohan said.

“The reopening of the UK economy and restrictions on international travel will provide a boost to Premier Inn, particularly in the coastal and tourist locations which account for around 15% of the chain’s overall estate. A full recovery in leisure demand will require the return of unrestricted events later on this year.”

XLMedia expecting revenues to improve in 2021 after being ‘knocked off track’

Liam Roche
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0
XLMedia expecting revenues to improve in 2021 after being ‘knocked off track’

Revenue fell to $54.8m in 2020, down from $79.7m the year before

XLMedia (LON:XLM) said it performed relatively well during 2020 as it revealed its results for the year.

The online marketing company also said it is expecting to see a big upturn in its revenues for the coming year.

The AIM-listed group’s revenue fell to $54.8m in 2020, down from $79.7m the year before.

XLMedia said its results came down to a Google search ranking penalty in January, in addition to being impacted by the coronavirus pandemic which caused an estimated $2m a month, as sports events and activity in financial services were reduced.

EBITDA decreased to $12.2m from US$33.5m in 2019 while adjusted pre-tex profit fell to $4.5m from $25.3m the year before.

XLMedia just about swung to a pre-tax profit of $1.1m following a loss of $57.7m in 2019.

Cash and short-term investments stood at $13.9m at the end of the year, compared to $29.9m at the end of 2019.

The media firm said its revenue levels in January 2021 are catching up to where they were the year before, as the board is expecting a material improvement in revenues this year.

“We entered 2020 with strategic and operational clarity, only to find ourselves knocked off track in the short term by the unforeseen challenges of a Google penalty and the Covid-19 global pandemic. Even against this backdrop the business performed relatively well, and we made significant progress on the priorities of upgrading the asset portfolio and restructuring the organisation, which will drive performance over the longer term,” said Stuart Simms, the chief executive officer of XLMedia.

“Over the last few months, the company completed two significant acquisitions in the US Sports market. This is a very positive and material step in rebalancing the group, providing immediate scale in an attractive and high-growth, regulated market.”

“Completing the transformation of the business, including the overhaul of the systems supporting it and delivering the long-term operating structure to maximise growth will involve further significant investment in 2021. Notwithstanding this, our level of confidence in the business performance and recovery continues to grow and we have entered 2021 with positive momentum, which we expect to lead to revenue materially ahead of the previous year,” he added.

Tesla beats expectations thanks to environmental credits and bitcoin

Liam Roche
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0
Tesla beats expectations thanks to environmental credits and bitcoin

Tesla posted record deliveries in Q1 despite global chip shortage

Tesla (NASDAQ:TSLA) narrowly beat analysts’ expectations for Q1 revenue the company revealed on Monday, as its environmental credit sales rose and it liquidated part of its bitcoin holding.

The electric vehicle manufacturer posted record deliveries in Q1 even though there was a global chip shortage. However, the company’s profit was not a result of its car sales.

Tesla invested $1.5bn in bitcoin, but then sold around 10% of it off during Q1. The company’s proceeds from the sale came in at $272, with a $101m “positive impact”.

“We do believe long term in the value of bitcoin,” said chief financial officer Zachary Kirkhorn. “It is our intent to hold what we have long term and continue to accumulate bitcoin from transactions from our customers as they purchase vehicles.”

Tesla has now made a profit for seven consecutive quarters, mostly down to their environmental credits.

Tesla earned $518m from sales of those credits, up 46% from a year before. Tesla earns credits for surpassing its emissions and fuel economy standards and sells them to other companies that fall short.

“Higher regulatory credits, lower taxes, and bitcoin sales buoyed financial results. Back these out, and it was a large miss,” Roth Capital Partners analyst Craig Irwin said.

Tesla said it managed to find its way through the global chip shortage by adapting to using new chips, which included developing new software.

Musk said it had “some of the most difficult supply chain challenges,” citing a chip shortage. “We’re mostly out of that particular problem,” he said.

The average price of its vehicles fell by 13% as production of the more expensive S and X models stopped ahead of major updates.

Its average cost per vehicle is now below $38,000 in Q1, compared with $84,000 in 2017.

Revenue rose to $10.39 billion from $5.99 billion a year earlier. Analysts had expected revenue of $10.29 billion, according to IBES data from Refinitiv.

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