Tons of reports out today on MSFT VMW
Much better use of time digging for $ANY info
Then responding to him
Commercial Cloud strength carries on. Commercial licensing fell 4% Y/Y-CC as Office shifts to O365, Windows headwinds post XP end-of-life, and weak transactional server revenue. That said, Commercial Other strength continued, with Commercial Cloud up 96% Y/Y-CC and on an $8B+ run-rate, Azure revenue up triple digits, and solid Enterprise Mobility growth. We expect commercial cloud revenue growth to continue and given Microsoft's growing O365 and Azure platforms, we think there is continued opportunity for premium up/cross-sells. Said differently, we do not believe the shift to the cloud to be cannibalizing over the short-to-medium term given a broader portfolio of products with deeper functionality as well as Microsoft's ability to enter new categories where it did not compete in previously.
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CommercialLicensing:$9.1-$9.2B(down8%-7%Y/Y) CommercialOther:$3.1-$3.2B(up29%-33%Y/Y) COGS:$7.0-$7.2B(reductionof13%-15%Y/Y) OPEX:$7.6-$7.7B(reductionof3%-4%Y/Y)
FX: 4% headwind to D&C revenue; 7% headwind to Commercial revenue; 5% headwind to total revenue
Otherincomeandexpenses:(-$200M)
Unearned revenue: Q/Q decline slightly better than historical seasonality excluding net impact from Win 10 revenue deferrals and impact from FX
F2Q16:
¦ FX: 3% headwind to D&C revenue; 7% headwind to Commercial revenue; 5% headwind to total revenue
F2H16:
¦ FX: 2% headwind to D&C revenue; 4% headwind to Commercial revenue; 3% headwind to total revenue
FY16:
¦ Windows10:Win10momentumtobereflectedinbusinessresultsin2H16
¦ Xbox: Xbox will continue to grow profitability with continued momentum and
October launch of Halo 5
¦ Phone Hardware: Given recent announced changes, expect significant Y/Y revenue declines each quarter and overall losses to decline for the FY (expect to see majority of improvement in 2H16 once restructuring is complete)
¦ Bing:tobeprofitableonastand-alonebasisinFY16
¦ Commercial: continued commercial momentum and remain on track to
achieve $20B commercial cloud ambition in FY18
¦ OPEX: $32.1-$32.4B (flat to down 1% Y/Y [prior was flat Y/Y]; reflects
savings from phone business and investments in Win 10, first-par ty hardware, and sales headcount).
¦ Tax rate: 24% +/- 1% excluding net impact from Windows 10 revenue deferrals
FY18 Ambitions (from April 2015 Analyst Day at the Microsoft BUILD conference):
¦ $20B annualized run rate in Commercial Cloud revenue in FY18 (vs. $6.3B run-rate, implying ~46% CAGR)
¦ 1billionactiveWindows10devicesinFY18
¦ Over 65% of the Exchange installed base will be on Office 365 (~35% at
FY15)
¦ Over 50% of the Office Commercial installed base will be on Office 365 (~25% at FY15)
¦ Microsoft believes O365 represents a long-term 1.2x uplift for new enterprise assurance customers, a 1.4x uplift for existing EA customers, and a 1.8x uplift for transactional customers
