Over the past two weeks, America’s largest and most successful companies have released their Q1 2015 earnings reports. First quarter earnings reports are a decent indicator of how a company will perform during the remaining fiscal year. This first quarter, as is typical, has failed to impress traders. A much-strengthened U.S. dollar has weighed on revenues, costing multinational corporations billions in foregone profits. As such, several of America's most well known companies beat earnings estimates, but failed to generate significant revenues; their results were met with mixed actions, as their impact reverberated across Wall Street. The following report details popular movers, including Google (GOOGL), Amazon (AMZN), Microsoft (MSFT), IBM, and MobileIron (MOBL).
Google (GOOGL): homson Reuters (TRI) predicted Google would post Q1 revenue of $18.46 billion and report earnings of $7.11 per share. However, Google was hugely affected by the strong dollar and unfavorable exchange rate; in fact, the weakened Euro cost Google $1 billion. Additionally, Google reported that inventory shortages had plagued its Nexus 6 cellphone sales. These factors, when combined with many failed R&D investments, hindered growth and resulted in Google's earnings miss. The company reported revenue of $17.26 billion and EPS of $6.57. Not surprisingly, Google's share price immediately fell 3%, but later traded much higher in after-hours markets.
Amazon (AMZN): Much like Google, Amazon's earnings were also hampered by the strong dollar. However, the e-commerce company still managed to beat consensus earnings expectations. Amazon reported revenue of $22.72 billion, up a whopping 15% Y/Y, which exceeded estimates of $22.4 billion. As a result, Amazon saw its stock price jump 15%, which netted Founder and CEO Jeff Bezos $5 billion in a matter of minutes. Many analysts attribute Amazon's Q1 success to its cloud computing division known as Amazon Web Services (or AWS). According to Amazon, AWS generated $1.57 billion in sales during the first quarter (obliterating Q1 2014 sales of $1.05 billion); researchers currently peg AWS at a valuation of $5 billion.
Microsoft (MSFT): Microsoft impressed Wall Street by reporting modest growth under Satya Nadella's new guidance (unlike the impressively incompetent Steve Ballmer). The company posted revenue of $21.73 billion, beating estimates of $21.06 billion. Microsoft can attribute its strong quarter to several different factors. Firstly, commercial cloud revenue increased by 106%, and its Surface and Lumia sales continue to increase. Microsoft also reiterated its immediate intention to pivot towards B2B cloud and mobile computing solutions. As software (or SaaS) and cloud solutions become increasingly popular, Microsoft is once again developing popular, and lucrative, enterprise platforms. After years of pain, this promising shift indicates a bright future for Microsoft.
IBM: Not surprisingly, this tech behemoth again failed to dazzle investors. While it beat EPS estimates, it only reported in-line revenue. IBM's Q1 revenue of $19.59 billion fell just shy of Wall Street's $19.64 billion expectation. This modest report comes on the heels of new partnerships with companies like Apple (AAPL) and Twitter (TWTR). Like Microsoft, IBM’s cloud computing division and data analytics segment reported impressive growth results. As such, IBM continues to transform and emphasize these massive product offerings. Although revenue failed to impress, IBM's recently announced dividend hike sent the stock up roughly $10.
MobileIron (MOBL): Unlike the aforementioned success stories, MobileIron did not post promising Q1 results. Its initial earnings report indicated lackluster revenue of roughly $33 million, compared to analyst estimates ranging from $34-$37 million. To add insult to injury, MobileIron also announced that its CFO, Todd Ford, would be leaving within the week to join a different company. These blows sent MobileIron's stock price plummeting; it traded down 29% in after-market exchanges. MobileIron CEO Bob Tinker attributed the missed earnings to his company's inability to close large deals, which disrupted internal guidance and led to a significantly lower revenue stream.