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Microsoft shares down on concerns over outlook

While second quarter earnings looked good at Microsoft, shares lost ground because of concerns for the remainder of the fiscal year. At one point shares climbed as high as the 200-day SMA, but then went into reverse.

(Video Transcript)

Microsoft Q2 numbers

Microsoft reported second quarter (Q2) fiscal numbers and the initial reaction was positive but then all of a sudden things went a little bit sour for the share price, trading all-sessions on the IG platform.

While earnings beat estimates it was a slight miss for the revenue line. Adjusted earnings were at $2.32 per share against $2.30 expected by analysts. Revenue was $52.75 billion against $53.12 billion that had been expected.

But as expected it's Microsoft's Azure cloud growth that kept earnings flowing, up 31%. A slower growth than during the same quarter this time last year but just beating analyst's expectations. But the big question is how long will it last?

Microsoft forecast third quarter revenue in its cloud business between $21.7 billion and $22 billion. Now that's just below the analyst average forecast of $22.14 billion and I think that's one of the reasons as to why we saw this market end off the highs.

Share price chart

You can see this big punch high we saw initially, taking us all the up to the 200-day moving average and then came the pullback. We ended down one and a quarter percent on the market yesterday.

The software maker taking a $1.2 billion charge as well in the quarter in connection with its decision to eliminate 10,000 employees revising its hardware lineup as well and consolidating leases.

So end effect for Microsoft last night, down one and a quarter percent.

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