Cloud Stocks: Analysis Of Microsoft’s Acquisition Of Nuance

Earlier last week, Microsoft (Nasdaq: MSFT) announced its third-quarter results that continued to outpace market expectations. Last month, Microsoft announced another big acquisition, this time within the Healthcare segment, to expand its presence in a $500 billion market.

Microsoft’s Financials

Microsoft’s revenues grew 15% to $41.71 billion, significantly ahead of the market’s forecast of $41.03 billion. Net income was $14.8 billion, or $1.95 per share, which was also ahead of the Street’s forecast of $1.78 per share.

Revenues from the Intelligent Cloud segment that includes Azure grew 23% to $15.12 billion. The market was looking for revenues of $14.92 billion from the segment. Azure sales fell 4% over the year. Revenue from Productivity & Business Solutions include cloud software assets such as LinkedIn grew 15.4% to $13.56 billion, again ahead of the analyst predictions of $13.49 billion. More Personal Computing that includes Windows, Xbox, and Surface revenues grew from $11 billion last year to $13.04 billion, ahead of the Street’s forecast of $12.55 billion.

It was a stellar quarter for Microsoft. It reported a growth of 39% in Commercial bookings, which is the highest ever in the last five years. Azure continues to grow and it became the leader in cloud data warehouse, followed by AWS and Snowflake. It continued to expand its developer presence globally. It reported 25 million Visual Studio monthly active users, with 65 million developers using GitHub. Monthly active users of Power Platform grew 97% to 16 million. Driven by continued investment in gaming content, Xbox subscriber base grew to 18 million.

For the current quarter, Microsoft forecast revenues of $43.6-$44.5 billion, compared with the market’s forecast of revenues of $42.98 billion.

Microsoft’s Nuance Acquisition

Earlier this month, Microsoft announced its $19.7 billion acquisition of Massachusetts-based Nuance Communications. Founded in 1992 by Ronald Croen, Nuance provides solutions to amplify human intelligence, increasing productivity and security, creating stronger relationships and better experiences for customers and the workforce. Nuance specializes in voice recognition, artificial intelligence, and is known for originally building the backend for Siri. It focuses especially within the healthcare segment and helps doctors speed up documentation, predict a patient’s needs, and improve digital record-keeping at hospitals.

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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William K. 1 month ago Member's comment

With microsopht getting into health care we can all anticipate paying higer prices for lower quality and having weekly corrections made if we want them or not. We can also expect new versions periodically with no regard to anything or anybodies needs.