Q4 2017 Earnings round-up: Microsoft, Qualcomm, Alibaba and AT&T

That time of the quarter is upon us so here is a quick snap-shot of the Q4 2017 results from Microsoft, Qualcomm, Alibaba and AT&T.

Microsoft

While investors might not have been blown away by this performance, all things are looking rosy for Microsoft as it hit roughly what analysts were expecting.

Share price remains relatively stable (at the time of writing) but a 12% year-on-year rise for total revenues to $28.9 billion is certainly something for Microsoft to be proud of. Operating income was also up 10% to $8.7 billion, with IoT, data, and AI services taking the praise in the cloud business.

“This quarter’s results speak to the differentiated value we are delivering to customers across our productivity solutions and as the hybrid cloud provider of choice,” said Satya Nadella, CEO of Microsoft. “Our investments in IoT, data, and AI services across cloud and the edge position us to further accelerate growth.”

Revenue in Intelligent Cloud was $7.8 billion and increased 15% year-on-year with Azure up 98%, while the Productivity and Business Processes unit, which includes Office and LinkedIn, collected $9 billion, a 25% increase. Even the More Personal Computing unit contributed to the party, perhaps owing to the Christmas period, with revenues of $12.2 billion, a year-on-year increase of 2%.

Qualcomm

On the other side of the coin, a flat financial performance from Qualcomm was not enough to stop a dip in share price as investors seemingly ponder the battles ahead.

Over the course of the last three months, Qualcomm managed to cobble together $6.1 billion in revenues, a 1% increase year-on-year, while net income was effectively nothing. Numbers like these are not exactly perfect for a management team which is trying to convince investors the Broadcom takeover is not the right path, but there is optimism.

“Our fiscal first quarter results reflect continued strong performance in our semiconductor business, as well as continued strength in 3G/4G handset ASPs,” said Steve Mollenkopf, CEO of Qualcomm. “We recently detailed our roadmap for value creation, outlining the significant growth potential for Qualcomm as we enter the 5G world and our products and technologies expand into attractive new markets.”

There is some good news however. Qualcomm effectively lost $6 billion this quarter, though this is down to the repatriation of cash owing to tax reforms in the US. While this is a win for the business, it will have to do quite a bit to convince investors it is in a good position considering the amount of time it is spending in the courtroom.

This quarter also included the European Commission’s €1 billion fine for abusing its dominant market position, as well as numerous lawsuits and countersuits to/from Apple. That said, it is a pretty fair comparison to the year before, as Q1 2017 included a $868 million imposed by the Korea Fair Trade Commission. Perhaps investors aren’t nervous about lawsuits, they’ve just gotten used to them.

Alibaba

Companies hailing from China seem to be able to print money and Alibaba is no different.

$12.8 billion in revenue, a 56% year-on-year increase, says it all. The eCommerce business grew an impressive 57% while the cloud computing side of things accounted for a 104% uplift. Revenue from digital media and entertainment division increased 33% to $832 million, with Youku video’s daily average subscribers grew over 100% year-on-year driven by successful launches of hit original drama series. Few would complain.

Tagged along with the earnings announcement was the decision to take a 33% stake in Ant Financial, the company which operates Alipay and other financial services. While this might look like a good move for the company which is looking to capitalize on the digital revolution in China, investors have been less than receptive. Although there has been a slight recovery, share price in Alibaba dropped almost 6% when the markets opened.

AT&T

Perhaps it should just be taken as standard now, but AT&T is another of the US giants to capitalize on tax reforms in the country.

Over the course of the fourth quarter, AT&T reported revenues of $41.7 billion, and profits of $19 billion, largely thanks to the tax reform. The injection of this cash will result in an extra $3 billion of cash to play with over the next twelve months, most of which will be spent on improving its network.

“The impact of tax reform and regulatory rationalization will be substantial and positive for the U.S. economy and AT&T,” said Randall Stephenson, AT&T CEO.

“Our FirstNet win and the opt-in by 100 percent of all states and territories will enable us to put the industry’s most robust spectrum assets to work in building a best-in-class nationwide network for public safety and first responders. On the Time Warner front, we look forward to presenting our case in court and closing the deal.”

The ongoing Time Warner headache seems to be one of the few negative marks over the last quarter. AT&T recorded 4.1 million total wireless net adds for the fourth quarter, only 329,000 were postpaid phone net adds however as the rest were connected devices and prepaid subs. Video added 300,000 subscriptions while there were 19,000 total broadband net adds. These aren’t the biggest numbers ever, but better than losing customers.