Please ensure Javascript is enabled for purposes of website accessibility

Dow Jones News: Microsoft and Coca-Cola Report Strong Results

By Timothy Green - Updated Jan 30, 2020 at 1:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Microsoft's cloud business continues to boom, and Coca-Cola reported solid organic sales growth.

The Dow Jones Industrial Average (^DJI -0.65%) was down 0.41% at 12:30 p.m. EST Thursday as the coronavirus outbreak in China continued to escalate. Strong earnings reports from Microsoft (MSFT -0.42%) and Coca-Cola (KO 1.16%) weren't enough to put the Dow in positive territory.

Microsoft produced double-digit revenue and earnings growth thanks to its rapidly growing cloud business, while Coca-Cola enjoyed strong organic growth and guided for more of the same in 2020.

The cloud drives growth for Microsoft

Microsoft's cloud-based businesses are showing no signs of slowing down. The software giant's fiscal second-quarter results beat analyst expectations across the board, with revenue getting a boost from the subscription-based Office 365 and Azure. Microsoft stock was up 2.2% by early afternoon.

Microsoft reported second-quarter revenue of $36.9 billion, up 14% year over year and about $1.2 billion above the average analyst estimate. Earnings per share (EPS) came in at $1.51, up 40% from the prior-year period and $0.19 higher than analysts were expecting.

Microsoft Office displayed on various smartphone screens.

Microsoft Office. Image source: Microsoft.

Office commercial products and cloud services grew revenue by 16%, with Office 365 Commercial revenue expanding by 27%. On the consumer side, Office and cloud services revenue jumped 19%. Office 365 Consumer now has 37.2 million subscribers.

Microsoft's Azure cloud platform also posted impressive growth, with revenue up 62% year over year. Azure is the no. 2 cloud infrastructure provider behind Amazon.com's Amazon Web Services, and Microsoft has been gaining ground on the market leader.

For the full year, Microsoft expects double-digit revenue and operating income growth, driven primarily by the commercial side of the business. The company sees the coronavirus outbreak in China injecting some uncertainty into its Windows OEM business, although the end of support for Windows 7 should continue to drive strong demand.

With the cloud business firing on all cylinders, shares of Microsoft are continuing their upward rise. Over the past year, Microsoft stock is now up about 67%.

Coca-Cola beats on revenue

Microsoft wasn't the only Dow component to report impressive results. Beverage giant Coca-Cola grew revenue at a double-digit rate in its fourth quarter, easily beating analyst estimates. Strong organic growth and a solid outlook helped boost the stock 3.1% by early afternoon.

Coca-Cola reported fourth-quarter revenue of $9.1 billion, up 16% year over year and $220 million higher than the average analyst estimate. Organic revenue was up 7%, driven by concentrate sales growth of 2% and pricing and mix growth of 5%.

By category, sparkling soft drink sales grew 3%; juice, dairy, and plant-based beverage sales were flat; water, enhanced water, and sports drink sales grew 2%; and tea and coffee volume was up 4%. Non-GAAP (adjusted) earnings per share came in at $0.44, up 1% from the prior-year period and in line with analyst expectations.

For 2020, Coca-Cola expects to produce organic sales growth of 5%. On a constant-currency basis, the company sees operating income growing by 8%. Acquisitions are expected to boost revenue slightly, while currency will have a small negative impact. Full-year EPS of $2.25 is expected, up from $2.11 in 2019.

Including Thursday's rally, shares of Coca-Cola are now up nearly 6% since the start of the year.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$255.74 (-0.42%) $-1.09
The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$63.64 (1.16%) $0.73
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$30,576.04 (-0.65%) $-199.39
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$107.22 (0.95%) $1.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
311%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.