--- title: "Dow 30 Earnings: Microsoft Second Quarter Fiscal 2018" description: Dow 30, second-quarter earnings, Microsoft, revenue of $28.9 billion, earnings of $0.96 per share excluding a $13.8 billion charge, shares tracking with market image: https://investor.valueline.com/hubfs/social-suggested-images/iStock_000015585557Medium-1-5.jpg --- [![The Value Line Blog](https://investor.valueline.com/hubfs/VL%20Blog%20Images/vl_blog_header.png)](https://investor.valueline.com/blog) [Stock Highlights](https://investor.valueline.com/blog/topic/stock-highlights) # Dow 30 Earnings: Microsoft Second Quarter Fiscal 2018 February 1, 2018 Software and cloud infrastructure and application services giant **Microsoft** ([MSFT ](https://research.valueline.com/research#sec=company&sym=MSFT)–[Free Microsoft Stock Report](https://research.valueline.com/api/report?documentID=2185-VL_20171110_VLIS_msft_X_01-1A3GRE54E9G1131R8EHSIBLUF5&symbol=MSFT)) reported revenue and earnings for its fiscal second quarter of $28.9 billion and $0.96 a share, excluding a charge of $13.8 billion related to the Tax Cuts and Jobs Act. (Fiscal years end June 30th.) This financial performance compared favorably with our estimates made in early November of $28.2 billion and $0.84 a share. Despite the good financial results, it appears that most investors had already factored in the results, with MSFT shares pretty much tracking with the market in early trading. From an operating standpoint, the established trends continued benefiting the company, with revenue growth from *Office 365 *and *Dynamics 365 *once again being a bright spot for the Productivity and Business Processes segment. In terms of revenue, LinkedIn also remained a positive factor, though it continued to be a drag on segment operating profit (inclusive of acquisition-related amortization). Meanwhile, the Intelligent Cloud segment continued progressing rapidly, with server products and cloud services revenue moving forward at a strong double-digit clip; cloud platform *Azure* remained on a steep upward trajectory (up 98%). News from the More Personal Computing segment showed that interest in *Windows 10 *stayed active, reflecting growth in the OEM market. In addition, Microsoft had a good holiday season in gaming, and search revenue (excluding acquisition costs) advanced nicely. As it stands now, we look for Microsoft's operations to remain on an upward swing, as it continues to make a rapid advance in the cloud arena. Indeed, it appears that the company is benefiting from scale economies in the cloud (enhancing profitability), though further investments will be required to meet the burgeoning demand. From a bottom-line perspective, Microsoft will benefit from the new tax law, with the company estimating an 18% blended rate for this fiscal year, versus the 22% targeted before the law passed. Taking the good operating performance recorded so far and the lower tax rate into account, we are now looking for earnings to reach $3.60 a share this year, up $0.35 from our November review. On the other hand, MSFT shares' current valuation seems to factor in a good portion of the prospects we see over both the near- and longer-term, making new commitments to this high-quality stock less enticing. Nonetheless, if the shares are already owned, we would continue to hold on to them, for now. **About The Company**: [Microsoft Corp.](http://www.valueline.com/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=10918) is the largest independent maker of software. It develops and sells products for a wide range of computing devices. The company also sells the *Xbox* video game console. Revenue sources in fiscal 2016 were as follows: Productivity & Business, 28.8%; Intelligent Cloud, 27.2%; Personal Computing, 44.0%. Research & development spending as a percent of 2016 sales was 13.0%. — Charles Clark *At the time of this article’s writing, the author did not have positions in any of the companies mentioned.* [![Register now for our free One Stock to Buy webinar](https://no-cache.hubspot.com/cta/default/2532383/5a80130b-f0ce-4bd8-acbd-f077f2232ec5.png)](https://cta-redirect.hubspot.com/cta/redirect/2532383/5a80130b-f0ce-4bd8-acbd-f077f2232ec5) ### Popular Posts Search Search Blog ### Topics - [Investing 101 (2)](https://investor.valueline.com/blog/topic/investing-101) - [Market Commentary (37)](https://investor.valueline.com/blog/topic/market-commentary) - [Stock Highlights (390)](https://investor.valueline.com/blog/topic/stock-highlights) - [Stock Market Today (2071)](https://investor.valueline.com/blog/topic/stock-market-today) Copyright 2026 Value Line, Inc. All Rights Reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. VALUE LINE IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN OR ANY DAMAGES OR LOSSES ARISING FROM ANY USE OF THE INFORMATION CONTAINED HEREIN. This blog is strictly for subscriber's own, non-commercial, internal use. No part of it may be reproduced, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product. Officers, directors, or employees of Value Line, Inc. and its affiliates and subsidiaries, and EULAV Asset Management, may own stocks that are featured in this email. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. Value Line, the Value Line logo, The Most Trusted Name in Investment Research, “Smart research. Smarter investing.”, The Value Line Investment Survey, Timeliness, and Safety are trademarks or registered trademarks of Value Line, Inc. and/or its affiliates in the United States and other countries.