Shares in Microsoft were more than 3% in the red in pre-market trading on Thursday morning, despite the tech company posting quarterly results that beat expectations after the close on Wednesday.
In its fiscal first quarter, Microsoft reported earnings per share of $3.30 (£2.54), which was ahead of analyst forecasts of $3.10, according to consensus estimates compiled by Bloomberg. Revenue of $65.6bn also topped expectations of $64.5bn.
These figures were also up compared with the same quarter last year, when Microsoft posted earnings per share of $2.99 and revenue of $56.5bn.
In its cloud business, Microsoft said commercial revenue which includes cloud services sales, came in at $38.9bn compared to expectations of $38.1bn. The company's Intelligent Cloud segment, which includes its Azure business, brought in $24.1bn in the quarter, up 20% year over year.
Matt Britzman, senior equity analyst at Hargreaves Lansdown (HL.L), said: The downbeat stock reaction is likely due to guidance given on the call.
"Margins are expected to come under pressure next quarter as the ramp-up in AI spending hits the cost line, and with Azure growth expected at 31-32%, that would mark a slowdown quarter-on-quarter."
Social media company Meta was also down in pre-market trading on Thursday, with shares trading more than 4% lower, following the release of its third-quarter results.
Meta posted earnings per share of $6.03 for the third quarter, which was ahead of expectations of $5.25, based on consensus estimates compiled by Bloomberg. This figure was also ahead of the $4.50 earnings per share Meta reported in Q3 last year.
Revenue came in at $40.5bn for the third quarter, beating forecasts of $40.2bn, as well as rising on last year's figure of $34.1bn.
However, Meta forecast revenue of between $45bn and $48bn for the fourth quarter, with analysts looking for $46.09bn. The company also said it expects capital expenses to grow significantly in 2025.
Dan Coatsworth, investment analyst at AJ Bell (AJB.L), highlighted that while Meta's daily active user growth for its social media platforms and apps was up 5% to 3.29 billion individuals, this missed the 3.31 billion market forecast.
"It’s not simply enough for Meta to move ahead, it needs to stay in the fast lane at all times as far as the market is concerned. Investors typically care about the short term and they want more, more, more," he said.
“Even though Meta owns some of the world’s most popular social media platforms, it still faces significant competition from the likes of TikTok, Snapchat and YouTube. Every minute someone uses a rival platform is a missed opportunity for Meta to generate advertising income.
"Therefore, weaker than expected daily active user figures suggest that Meta needs to do more to get people scrolling through Facebook, Instagram and its other brands."
This week has been busy for earnings releases from the Magnificent 7 tech giants, with Meta, Microsoft and Alphabet (GOOG, GOOGL) having now reported. On Thursday, it is the turn of Apple (AAPL) and Amazon (AMZN) to release latest quarterly results.
Coffee shop chain Starbucks posted final fourth quarter results that disappointed on key metrics across the board, after having released a preliminary set of figures last week.
Revenue was down 3% year-on-year to $9.1bn, while adjusted earnings per share slumped 25% to $0.80.
Brian Niccol, who took over as CEO in September, said in an earnings call that it was "clear we need to fundamentally change our strategy to win back customers".
Since taking the helm, Niccol has been aiming to refocus the company with his his "Back to Starbucks" plan, which calls for a return to basics, better pricing, and faster service.
This includes the aim of trying to serve customers their beverage in four minutes or less, as well as simplifying its menu.
CFO Rachel Ruggeri shared the company will "reduce the number" of "new stores and renovations in fiscal year 2025" to focus on "reestablishing Starbucks as the community coffee house."
As part of these plans, Starbucks will reintroduce personal touches such as coffee in ceramic mugs. This will also see a return of baristas using Sharpies to note down order information on cups, as another more human touch.
Shares were little changed in pre-market trading on Thursday morning.
In the resignation letter, EY said: “We are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management's and the Audit Committee’s representations and to be unwilling to be associated with the financial statements prepared by management, and after concluding we can no longer provide the Audit Services in accordance with applicable law or professional obligations.”
EY quit while conducting the audit for Super Micro's fiscal year that ended on June 30, 2024. In a filing on Wednesday, Super Micro said it "disagrees" with EY's decision and is "working diligently to select new auditors."
Super Micro said it will provide a business update on its first quarter on Tuesday 5 November, which is the same day as the US presidential election.
EY's resignation comes two months after a report from Hindenburg Research alleged, among other things, "accounting manipulation" at Super Micro.
Carmaker Stellantis, whose brands include Jeep and Peugeot, reported a 27% slump in net revenues in the third quarter to €33bn (£27.6bn), compared with the same period last year.
The company said this was "primarily due to lower shipments and unfavourable mix as well as pricing and foreign exchange impacts".
Stellantis said consolidated shipments were down 20% year-on-year. The carmaker said the third quarter also included "production gaps in several models as a global product transition begins, planned North American inventory reductions, and headwinds from a challenging European market environment".
However, Stellantis said reception for new products was "strong", including orders for more than 50,000 units of its new Citroën C3 and around 75,000 units for the new Peugeot 3008.
The company also reiterated its financial guidance for the 2024 year.
Doug Ostermann, chief financial officer at Stellantis, said: "While Q3 2024 performance is below our potential, I’m pleased with our progress addressing operational issues, in particular US inventories, which have been reduced meaningfully and are on track for year-end targets, as well as stabilisation of U.S. market share.
"In Europe, stringent quality requirements delayed the start of certain high-volume products, but with progress resolving challenges we will soon benefit from the significantly expanded reach our generational new product wave brings to 2025 and beyond."
Shares were up nearly 2% in pre-market trading on Thursday.
•USD
(STLAM.MI)
Other companies in the news on Thursday 31 October:
