Meta Delivers Lackluster Forecast & Microsoft's Cloud Unit Grows

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This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead, with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Massar and Tim Stenovec. On Bloomberg Radio.

**Carol Massar** (0:31)
All right, everybody. Yes, indeed. You are listening to Bloomberg Businessweek Daily, and this is Carol Massar along with Tim Stenovec. We've got Meta and Microsoft crossing the Bloomberg terminal.

**Tim Stenovec** (0:40)
I am going to Meta platforms first. Shares are lower. The company did miss estimates in second quarter earnings per share. The company also raised in the lower end of its expense outlook. The company sees third quarter revenue coming in at $61 to $64 billion. The estimate was for $63.17 billion. The company also expects third quarter total revenue to be in the range of $61 to $64 billion, as I mentioned. Second quarter revenue did come in just above estimates at $60.8 billion. Second quarter ad revenue coming in above estimates at $59.36 billion. Second quarter earnings per share coming in below estimates at $6.18.
Family of apps operating income came in significantly below estimates. Second quarter reality labs operating loss coming in above estimates at $4.62 billion. Second quarter family of apps revenue coming in at $60 billion. The estimates were $59 billion.

**Carol Massar** (1:38)
As you mentioned, shares of Meta platforms were looking at that stock trading down about 5% in the after hours. We're going to be looking for some commentary about the company looking to build out a cloud business. Let's go over to Microsoft. That stock up about 3% here in the after hours.

**Tim Stenovec** (1:53)
Yeah, we're actually getting that redhead. The company sees fiscal year cap ex 130 to 145 It saw 125 to 145 This is Meta platforms in terms of fiscal year cap ex 130 to 145 It saw 125 to 145

**Carol Massar** (2:06)
Let's keep in mind that Meta did raise its spending outlook for the year last time it reported back in April and the stock sold off the next day. So we're going to keep an eye on that one. Meta continuing to trade down about 7%.
It's other mag 7 brethren up about 3.8% here in the aftermarket. Let's go through the numbers, folks. You've got fourth quarter cloud revenue, always important, 59.3 billion. That is a beat. Street estimate was for 58.7. Azure and other cloud revenue, X currency, XFX, up 43%. The estimate was for a gain of about 39.6%. Adjusted EPS for the fourth quarter, $4.74 a share. That is almost 50 cents higher, 49 to be exact, than what the street was expecting. Intelligent cloud revenue for the fourth quarter, 39.31 billion. That was a beat.
38.17 was the street estimate. Let me go to also, the fourth quarter revenue, as I mentioned, 90.01 billion for the fourth quarter, beating the street estimate of 87.72 billion. The company with some commentary, Microsoft, saying that its 365 co-pilot reached over 30 million paid seats. It said the fourth quarter 365 consumer cloud revenue increased 24% Azure revenue, surpassing $100 billion for the first time.
It also said $3.2 billion gain from its investment in Anthropic in the fourth quarter. Again, we're seeing some optimism in the aftermarket when it comes to Microsoft. Again, that stock, as I pull it up for you, it is up about 3.3% here. Again, pressure on Meta. Qualcomm also out.

**Tim Stenovec** (3:52)
Yeah, pressure on Qualcomm as well, down about 6% in the after hours. The profit forecast misestimated sign of those woes of smartphones. Earnings coming in $2.05 to $2.25 a share. Revenue will be $9.7 billion to $10.5 billion. That would miss the average analyst estimate. The company's losing business from Apple more rapidly than anticipated. It's being forced to raise prices due to supply shortages.
I want to note that Ed Ludlow is going to be speaking with Cristiano Amon, the company's CEO on Bloomberg Tech tomorrow, so be sure to tune in for that.

**Carol Massar** (4:25)
One more I've got to bring to you, because we've got Arm Holdings also out in the aftermarket. We'll take a look at the share price there, but the company sees second quarter revenue, so this is an outlook, sees second quarter revenue 1.33 billion to 1.43 billion. The estimate is 1.35 billion, so it looks like in terms of the upper end of the range, there's some potential for upside. Sees second quarter adjusted operating expenses of about 780 million. That's less than what the street was expecting, 793 million. First quarter adjusted gross margin, so we're looking back at the last quarter, 98.1 percent. That's exactly what the street was looking for.