Microsoft Corporation (MSFT Quick QuoteMSFT - Free Report) is set to report third-quarter fiscal 2020 results on Apr 29, after market close. Over the past year, the tech behemoth has been a star performer with respect to the broader market. Over the period, Microsoft has returned 30% compared with the Computer - Software industry’s return of 15.6%.

 

 

But the first three months of this year have not been the same, thanks to the coronavirus outbreak. 

 

Coronavirus-led supply chain disruptions are expected to have weighed on the company’s Personal Computing segment, while the Microsoft’s Intelligent Cloud segment has likely improved. The company’s cloud computing platform Azure, in particular, has been one of the key growth areas in recent years. Analysts expect the momentum to continue beyond the quarters ending March 2020 as well.

 

Here's what to look out for when Microsoft reports its March quarter results on Apr 29 – 

 

 

Microsoft had warned investors of the impact of coronavirus on its Personal Computing (MPC) segment.

 

Supply chain disturbances because of the pandemic and its outcome on production in China weakened shipments of Windows PCs and Surface devices, which are part of the MPC segment. It’s worth pointing out that China exports nearly 50% of the world’s technologies, including computers, laptops and other components.

 

 

With device sales expected to have taken a beating, investors are hopeful that Microsoft’s cloud business has made up for it.

 

Microsoft’s Azure business is expected to have gained the most as widespread lockdowns in the wake of the virus outbreak has increased the number of people working or learning from home. 

 

And with majority of people now working or learning remotely, most of the companies need to move a bulk portion of their workloads to the cloud. To top it, consumers have started to shop online in the wake of the restrictions. Thus, any consumer-oriented business needs to have a digital presence built on the cloud in order to survive.

 

Microsoft’s Azure ranks second in global cloud business, with a market share of 18%. The Intelligent Cloud segment topped estimates in the previous two quarters. And analysts expect the segment’s revenues to improve 0.6% in the quarter ending March 2020 compared to the same period a year ago.

 

 

The coronavirus-induced work from home environment has been a blessing in disguise for some of Microsoft’s services in the March quarter.

 

Microsoft Teams and Microsoft 365, known as work collaboration products, saw user count tick up to 44 million during the first three months of this year. Increasing focus on security measures related to remote work should also have acted in favor.

 

 

Despite the negative economic impact of COVID-19, Microsoft’s predominant focus on cloud might have saved it from a coronavirus crash in the March quarter. Thus, the tech giant’s earnings and revenues for the quarter are expected to increase 11.4% and 10.7% from the year-earlier levels, respectively.

 

 

 

In fact, the Zacks Rank #3 (Hold) company has an Earnings ESP of +0.05%. This is our proprietary methodology for determining stocks that have the best chance to positively surprise with their upcoming earnings announcements. It provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Positive results, no doubt, will lead to a rally in the share price. The company’s expected earnings growth rate for the current and next year is 16.8% and 11.2%, respectively.

 

 

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020? 

 

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