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Software behemoth Microsoft (MSFT) late Wednesday crushed Wall Street’s targets for its fiscal second quarter. The Microsoft earnings report sent MSFT stock higher in extended trading.

The Redmond, Wash.-based company earned $1.51 a share on sales of $36.91 billion in the quarter ended Dec. 31. Analysts expected Microsoft earnings of $1.32 a share on sales of $35.68 billion. On a year-over-year basis, Microsoft earnings rose 37% while sales increased 14%.

“Strong execution from our sales teams and partners drove Commercial Cloud revenue to $12.5 billion, up 39% year over year,” Chief Financial Officer Amy Hood said in the Microsoft earnings news release. The company’s commercial cloud business includes Azure infrastructure services, Office 365 productivity software, Dynamics business software and other offerings.

Microsoft did not give March-quarter guidance in its news release. Analysts have been modeling Microsoft earnings of $1.24 a share on sales of $34.1 billion in its fiscal third quarter. In the year-earlier quarter, Microsoft earned $1.14 a share on sales of $30.6 billion.

MSFT Stock Pops On December-Quarter Beat

Microsoft stock rose 2.8% in after-hours trading on the stock market today. During the regular session, MSFT stock climbed 1.6% to 168.04. In intraday trading, Microsoft stock hit a record high of 168.74.

MSFT stock currently ranks No. 22 on the IBD 50 list of top-performing growth stocks. Its transition to cloud computing and software-as-a-service has fueled its growth in recent years.

Microsoft Earnings: Company Touts Innovation

“We are innovating across every layer of our differentiated technology stack and leading in key secular areas that are critical to our customers’ success,” Chief Executive Satya Nadella said in a written statement.

Of the company’s three business segments, Intelligent Cloud grew the fastest in the December quarter. Its sales rose 27% to $11.9 billion. Azure was a star performer, with revenue growth of 62%. Azure competes with Amazon.com’s (AMZN) Amazon Web Services.

Microsoft’s Productivity and Business Processes segment was second, with sales up 17% to $11.8 billion. That segment includes the company’s Office, Dynamics and LinkedIn businesses.

The company’s More Personal Computing segment posted sales of $13.2 billion, up 2%. That segment includes Windows software, Surface computers, search advertising and Xbox video games.

Author: Patrick Seitz

Source: Investors: Microsoft Crushes Wall Street’s Targets With Commercial Cloud Growth

Amazon.com’s (AMZN) tight grip on the market for smart speakers is starting to loosen. A research firm predicts Amazon’s share in the market will slip below two-thirds in the U.S. in 2019, while Alphabet’s (GOOGL) Google will make major gains.

EMarketer predicted Thursday that Amazon’s Echo family of smart speakers with the Alexa voice assistant will have 63.3% of the user base in the U.S. in 2019. That’s down from 66.6% this year, it said.

Meanwhile, No. 2 Google will increase its share of the user base to 31% in 2019 from 29.5% this year. Alphabet sells Google Home smart speakers with its Google Assistant voice-response technology.

All other vendors will combine for 12% of the user base next year, up from 8.3% in 2018, eMarketer predicted. Other players in the market include Apple (AAPL) with HomePod, Sonos (SONO) with Sonos One and Facebook (FB) with its Portal smart screen.

“Amazon has remained relevant by plugging Alexa into premium speakers like the Sonos, but even Sonos plans to bring Google Assistant to its devices next year, keeping the two companies neck and neck in the voice assistant race,” eMarketer analyst Jaimie Chung in a blog post.

Next year, 74.2 million people in the U.S. will use smart speakers, up 15% over 2018, eMarketer said.

While smart speakers have grown in capabilities, most people use them for basic functions. Listening to music and asking questions about weather, traffic and news are the most common uses, eMarketer said.

Check Out Google’s Video, Ya Filthy Animal
Smart speakers have been big promotional items this holiday season for Amazon and Google.

On Wednesday, Google posted a funny video in which actor Macaulay Culkin reprises the role of Kevin McCallister from the 1990 Christmas movie “Home Alone.” In the video, called “Home Alone Again with the Google Assistant,” an adult Kevin uses the Google Assistant to stay productive, entertained and safe while home alone.

Also this week, Google Assistant scored the highest for accuracy in a test of voice assistants by Loup Ventures. The venture capital firm posted the results of its annual smart speaker IQ test on Thursday.

Loup Ventures tested Google Assistant, Amazon’s Alexa, Apple’s Siri and Microsoft’s (MSFT) Cortana using 800 spoken questions each.

Google Assistant was able to answer 88% of them correctly vs. Siri at 75%, Alexa at 73% and Cortana at 63%. Last year, Google Assistant was able to answer 81% correctly vs. Siri at 52%, Alexa at 64% and Cortana at 56%.

Publication: Investor’s Business Daily| Amazon Echo Seen Losing Ground To Rival Smart Speakers In 2019

Wall Street analysts on Friday praised social game publisher Zynga (ZNGA) for its planned acquisition of Helsinki-based mobile game studio Small Giant Games, creator of the hit franchise “Empires & Puzzles.” Zynga stock jumped on the news.

San Francisco-based Zynga announced late Thursday that it agreed to buy Small Giant for about $700 million. It will first acquire 80% of the Finnish company for $560 million, with $330 million in cash and the rest in stock. Zynga plans to acquire the remaining 20% of the firm over the next three years at valuations based on profit goals.

It will use the acquisition to expand its game portfolio, which now includes “Words With Friends,” “Zynga Poker” and “FarmVille.” Zynga expects the deal to be accretive to earnings in 2019.

Zynga stock rose 1.1% to 3.63 on the stock market today. Earlier in the session, it was up as much as 6.7%. It briefly climbed above its 50-day moving average line before retreating, but remains well below its 200-day line.

‘Wonka’ Game Boosts Fourth-Quarter Outlook
Zynga also raised its guidance for the fourth quarter based on strong performance of core games and new title “Wonka’s World of Candy.” It now expects adjusted earnings of $33 million on sales of $243 million. That’s up from its prior outlook for adjusted earnings of $32 million on revenue of $235 million.

Morgan Stanley called it a “winning strategy” in describing Zynga’s purchase of Small Giant. The deal will increase Zynga’s exposure outside North America, the investment bank said.

Stifel analyst Drew Crum said the deal “bolsters Zynga’s already robust pipeline” of games. Small Giant is developing a new game with a possible release in 2019 or 2020, he said. Crum reiterated his buy rating on Zynga stock with a price target of 4.75.

Acquisition ‘An Expensive Christmas Gift’
“Zynga has treated itself to an expensive Christmas gift,” Wedbush analyst Michael Pachter said in a report. The Small Giant deal is Zynga’s biggest acquisition to date. It tops the $527 million it paid for U.K.-based game developer Natural Motion in 2014.

Pachter maintained his outperform rating on Zynga stock. But he cut his 12-month price target to 5 from 6 to reflect the broader market pullback.

KeyBanc Capital Markets analyst Evan Wingren said the deal is expensive, but offers “big potential.”

Publication: Investor’s Business Daily| Game Developer Zynga Gets Positive Reviews For Small Giant Acquisition

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