Microsoft Corp. (MSFT, +0.77%) failed to impress when the
company reported its second quarter earnings which reflected its biggest
quarterly loss ever. To start, Microsoft reported a loss in revenue which
declined by 5.1 percent. This came as a result of the continued decline in PC
demand as well as other items which were all related to the Nokia mobile-phone
business which Microsoft acquired last year. For the period ending on the 30th
of June, revenue declined from $23.38 billion a year ago to $22.18 billion.
This beat expectations of analysts polled by Thomson Reuters who expected
revenue of $22.03 billion. Also on the upside were the earnings per share and
after removing one-time items as well as the write-down, Microsoft managed to
beat analysts’ expectations. Microsoft reported a loss of 40 cents a share, or
$3.2 billion, which is down compared to 55 cents a share, or profit of $4.61
billion, reported a year ago. Excluding restructuring charges, the write-down
and other one-time items, earnings per share were 62 cents which beat
expectations for profit of 56 cents. With Apple Inc. dominating the smartphone
market, Microsoft's Windows smartphones only make up a very small share of this
market. At the beginning of July, Microsoft stated that they would be writing
down approximately 80 percent of the $9.4 billion deal for Nokia's handset
business. In addition, the technology giant said that it would cut more than 6
percent of its global workforce which would mostly impact its mobile phone
operation. All eyes are now on the release Windows 10, the latest version of
Microsoft's operating system, and how this will impact the financial
performance of the company. Meanwhile, Microsoft shares are currently trading
at $47.28 a share.
INDICES
On Tuesday, U.S. stocks traded lower with the Dow Jones
Industrial Average (DJIA) declining more than 180 points. This drop came as a
result of a big decline in the share price of both United Technologies Corp.
(UTX, -7.03%) and IBM (IBM, -5.86%) which both reported poor quarterly reports.
IBM is the 2nd highest-weighted component in the blue chip Dow index while
United Technologies sits in tenth place. As a result of a decline in these
companies, this contributed to a 120 point drop in the Dow. At the close of trading,
the DJIA was down 1%, or 181.12 points, at 17,919.29. Twenty six of the index’s
30 components, finished lower. Meanwhile, the Nasdaq Composite index (COMP)
also declined 0.2%, or 10.74 points, to 5,208.12, retreating from the record
close set on Monday. Also on the downside was the S&P 500 index (SPX) which
dropped 0.4%, or 9.07 points, to 2,119.21. Losses were led by the telecoms
sector which declined 1.7 percent while 9 out of the index’s 10 main sectors
ended lower.
CURRENCIES
On Tuesday, the U.S. dollar (USD) traded lower. This came in
response to investors locking in profits as a result of the USD’s recent rise
to a three-month high. Meanwhile, the greenback continued to remain supported
by expectations of an interest rate hike by the Federal Reserve in the near
future after the Chair Janet Yellen stated last week that the central bank is
likely to raise rates ‘at some point this year’. The EUR/USD traded at 1.0913,
up 0.84% while the GBP/USD traded at 1.5549, down 0.10%. Meanwhile, against the
Australian dollar, the Japanese yen and the Swiss franc, the U.S. dollar traded
lower with the AUD/USD up 0.81% at 0.7432, the USD/JPY down 0.20% at 124.02 and
with the USD/CHF down 0.74% and trading at 0.9574. Also, the U.S. dollar index
was at 97.54, down 0.62%.
In early Asian trading on Wednesday, crude oil prices
dropped. This came in response to the industry data on stocks that was released
in the U.S. on Tuesday. According to the API (American Petroleum Institute), last
week, crude oil stocks rose by 2.3 million barrels in the U.S. Meanwhile, in
their weekly report last week, the EIA (Energy Information Administration)
reported that for the week ending on the 17th of July, crude stockpiles in the
U.S. declined by 2.2 million barrels. WTI crude oil for delivery in September
traded at $50.60 a barrel, down 0.51%, on the NYMEX. On Monday, Brent crude oil
for delivery in September traded at $57.08 a barrel, up 0.78%, or $57.08, on
the Intercontinental Exchange (ICE) in London.
The Daily Market Review brought to you by Billionaire Forex UK in collaboration with STOCK.
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