Why 2017 Was a Year to Remember for Microsoft Corporation

Microsoft (NASDAQ: MSFT) had a lot to write about last year. The company beat analysts' consensus earnings estimates four times in 2017, made great strides towards its high cloud computing goals, and saw its stock price rise more than 30%.

The company is thriving under the leadership of CEO Satya Nadella, and Microsoft's laser focus on new areas of growth is already paying off. So let's look at what went well with the company this year.

Sale of share prices

A share price gain of around 30% over the past year may not be as high as other high-tech technology stocks, but it's nothing that can be faced by a company the size of Microsoft.

The company obtained the majority of those profits as it repeatedly outperformed analysts' earnings estimates in four quarterly reports. For example, in the first quarter of fiscal year 2018 (reported at the end of October), the company had earnings of $ 0.84, while analysts expected $ 0.72. And in the previous quarter, Microsoft's earnings reached a whopping $ 0.98 per share, when analysts were expecting only $ 0.71.

All this has helped the company's stock price move up from the beginning of the year, with a particularly big jump after the Q1 2018 report.

The company not only achieved impressive gains in its stock prices in 2017, but followed a 19% increase in shares in 2015 and 12% in 2016, which has helped to increase investor confidence in stocks that They do not seem to be slowing down. down.

Reaching important goals

Part of the optimism that surrounds Microsoft at this time is that the company is performing well its cloud computing potential. In 2015, Nadella said that Microsoft's business cloud business would reach an annualized execution rate of $ 20 billion by mid-2018. That was a pretty high goal considering that the company's cloud execution rate was $ 6.4 billion.

In the fiscal first quarter of 2018, the company exceeded that goal by approximately $ 400,000 and did so a few months ahead of schedule. It was an important milestone for Microsoft, not only because it showed that it can set long-term goals in new growth markets and meet them, but also because it expects cloud computing to become a $ 411 billion market by 2020. Reaching the target of annual execution rate showed that Microsoft's pivot towards the cloud is in full swing and that the company can take advantage of it.

Microsoft said its revenues in the commercial cloud for the first quarter of 2018 exceeded $ 5 billion, an increase of 56% year-on-year, and that gross margin increased by 8 percentage points, to 57%. In addition, revenues from the company's Intelligent Cloud business (which includes its Azure public cloud offer) increased 14%.

Microsoft is competing successfully in the space of cloud computing at this time, with 11% of the public cloud computing market. That is still way behind Amazon's 40%, but the company's profits this year show that it does not need to be the market leader to benefit in this segment.

Can this continue?

Microsoft has placed itself in a solid position this year that should help drive the company in 2018. Investors should expect more growth in the company's cloud segments and see more investments in other opportunities, including artificial intelligence and augmented reality. If Microsoft continues at the same pace it did in 2017, then this next year should bring much more for investors to expect.

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