Microsoft Earnings: Why Shareholders Should Be Happy

The Nasdaq fell nearly 2% on Tuesday as e-commerce specialist Shopify announced it was laying off 10% of its workforce to help it navigate worse-than-expected demand for its platform. This spooked tech investors as they wondered what else may be on the horizon this earnings season. With this backdrop, combined with a generally tough year for tech stocks, investors were likely hoping software giant Microsoft (NASDAQ: MSFT) could provide some upbeat news on Tuesday when it reported earnings.

While Microsoft unfortunately posted top- and bottom-line results below the consensus analyst estimates for the two metrics, there's still a lot to like about the report. But seeing the silver lining requires a different perspective. For instance, the results are solid in light of the stock's more conservative valuation following a 25% decline in the stock price this year. Further, a close look at the report reveals that Microsoft's cloud-computing business, Azure, is still growing at a high growth rate.

Microsoft's revenue for its fiscal fourth quarter, which ended on July 26, rose 12% year over year to $51.9 billion. On a constant currency basis, however, revenue rose 16% year over year. Also weighing on reported growth was a tough year-ago comparison; revenue in the year-ago period rose 21% year over year.

Source Fool.com