| Here’s your daily business briefing. - 💻 AI boosts Microsoft Cloud growth
- 🔍 Deep Dive: Home Depot enhances contractor supply chain
- 💰 Alphabet stock soars 14% with first dividend
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Microsoft ($MSFT) exceeded expectations in its fiscal third-quarter results, with total revenue reaching $61.86B, a 17% YoY increase, and net income hitting $21.94B, while earnings per share stood at $2.94, surpassing the anticipated $2.82. However, revenue guidance for the fiscal fourth quarter slightly missed expectations, as Microsoft's finance chief projected $64B, below the consensus of $64.5B. More: - The Intelligent Cloud division, which encompasses Azure, Windows Server, Nuance, and GitHub, saw a revenue increase of 21% to $26.71B.
- Revenue from Azure and other cloud services increased by 31%, with services relating to artificial intelligence accounting for 7% of this growth.
- Revenue from the Productivity and Business Processes segment, which includes Office, LinkedIn, and Dynamics, totaled $19.57B, while revenue from More Personal Computing totaled $15.58B.
- Microsoft CEO Satya Nadella announced that the GitHub Copilot code-generation tool has garnered 1.8 million paid subscribers.
- This quarter represents the debut of Copilot sales for commercial Microsoft 365 subscriptions, utilizing AI models from OpenAI, with Amgen securing 10,000 seats.
Zoom Out: - Last month, Microsoft paid Inflection AI $650M for licensing its AI software and hired Inflection's co-founders, Mustafa Suleyman and Karén Simonyan, making a notable move in the AI industry.
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What the numbers say: Home Depot reported a 3.5% decline in comparable sales for the quarter ended Jan. 28 compared to the previous year, with this change consistent across both professional customers and retail shoppers. Additionally, Home Depot ($HD) aims to expand its distribution network by adding four new centers to its existing 14 warehouses, focusing on serving professional customers, who account for approximately 48% of its total sales, in a market estimated at around $200B for large orders. Relevance: Home Depot has faced declining sales due to factors like high interest rates and sluggish housing turnover, which impact demand for home-improvement projects. Home Depot is investing in its supply chain to enhance efficiency and reduce costs, utilizing strategies such as grouping similar products in warehouses to provide competitive pricing and quicker fulfillment to better serve its significant professional customer base. More data: Home Depot is expanding its distribution centers and targeting professional customers. Additionally, strategic acquisitions like Construction Resources and HD Supply Holdings aim to strengthen its position among professionals and contractors. | | | |
| 3 | | Alphabet ($GOOGL) surpassed expectations in the first quarter, reporting EPS of $1.89, exceeding the LSEG projection of $1.51, and revenue of $80.54B, surpassing the estimated $78.59B. Additionally, the company announced its inaugural dividend of $0.20 per share, scheduled for payment on June 17, while experiencing 15% YoY revenue growth, its fastest rate since early 2022. More: - YouTube's advertising revenue exceeded expectations, reaching $8.09B, surpassing the StreetAccount estimate of $7.72B.
- Google's ad sales soared to $61.66B from $54.55B a year ago, with its core advertising business rebounding from challenges in 2022 and 2023.
- Google Cloud revenue surpassed expectations, reaching $9.57B, exceeding the StreetAccount estimate of $9.35B.
- Traffic acquisition costs slightly exceeded expectations, totaling $12.95B, slightly above the StreetAccount projection of $12.74B.
- Furthermore, Alphabet's board approved a $70B share repurchase initiative, demonstrating confidence in the company's financial standing and future prospects.
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| 4 | | Intel surpassed expectations for first-quarter adjusted EPS at $0.18, exceeding the anticipated $0.14, but fell short in sales, with revenue reaching $12.72B compared to the expected $12.78B. Additionally, the company reported a net loss of $400M, or $0.09 per share, in contrast to a net loss of $2.8B, or $0.66 per share, in the same period last year. More: - Intel ($INTC) expects second-quarter earnings of $0.10 per share and revenue of $13B at the midpoint, below analysts' projections of $0.25 per share on $13.57B in sales.
- The stock experienced an 8% decline in extended trading after the company's disappointing forecast for the current quarter.
- Intel Foundry, the chip manufacturing division, recorded $4.4B in revenue, a 10% decrease YoY, alongside a $2.5B operating loss in the March quarter.
- Client computing sales, which include chips for PCs and laptops, reached $7.5B, a 31% increase YoY.
- As Intel and Nvidia battle in the server sector, sales of AI and data center businesses increased 5% to $3B.
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| 5 | | Nestle's first-quarter organic sales increased by 1.4%, missing analysts' projections of 2.9%, with a 2% internal growth rate decline, suggesting reduced volumes. Additionally, North America encountered frozen food sales challenges, notably in categories like pizza, resulting in a 2.5% decline in organic sales in the region. More: - Nestle's health science division experienced a downturn attributed to supply limitations, leading to negative growth in vitamins, minerals, and supplements.
- Nestle CEO Mark Schneider expressed optimism that real internal growth will pick up by 2024's second quarter, particularly in the vitamins division.
- The business stuck to its 4% annual organic sales growth forecast and a slight rise in the underlying trading operating profit margin.
- Analyst Jean-Philippe Bertschy highlighted that Nestle is tackling safety concerns regarding its mineral water and scrutiny over sugar content in infant food, aiming to rejuvenate the company and improve execution.
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| 6 | | Unilever Plc exceeded analyst expectations with a 4.4% sales increase in the first quarter, driven by a 7.4% rise in the beauty and wellbeing unit, largely due to increased volumes. CEO Hein Schumacher's turnaround strategy for Unilever includes boosting volumes to reclaim market share. More: - After the favorable sales report, Unilever's shares surged up to 5% in early London trading.
- Unilever revealed intentions in March to either spin off or divest its ice cream business, generating approximately $8.6B in annual sales.
- The ice cream unit experienced 2.3% underlying sales growth, attributed to increased prices and decreased volumes.
- Unilever reaffirmed its sales growth forecast for the year, anticipating a 3% to 5% increase and a slight enhancement in underlying operating margin.
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Shriram Jeevakumar | |
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