Microsoft’s (MSFT) CEO Satya Nadella on Q4 2014 Results – Earnings Call Transcript

Source: Seeking Alpha


Microsoft Corporation (NASDAQ:MSFT)

Q4 2014 Earnings Conference Call

July 22, 2014 5:30 PM ET


Chris Suh – General Manager, IR

Amy Hood – EVP and CFO

Satya Nadella – CEO


Mark Moerdler – Sanford Bernstein

Brent Thill – UBS

Keith Weiss – Morgan Stanley

Phil Winslow – Credit Suisse

Rick Sherlund – Nomura

Walter Pritchard – Citigroup

Heather Bellini – Goldman Sachs

Ed Maguire – CLSA

Karl Keirstead – Deutsche Bank

Jim Moore – FBR Capital

Brad Reback – Stifel


Greetings and welcome to Microsoft’s Fourth Quarter Fiscal Year 2014 Earnings. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded.

I would now like to turn the conference over to your host, Chris Suh, General Manager, Investor Relations for Microsoft. Thank you, Chris. You may begin.

Chris Suh

Thank you, Roya. Good afternoon and thank you for joining us today. On the call with me are Satya Nadella, Chief Executive Officer; Amy Hood, Chief Financial Officer; Frank Brod, Chief Accounting Officer; and John Seethoff, Deputy General Counsel.

On our website,, we have posted a slide deck which provides summary of our financial results, a reconciliation of differences between GAAP and non-GAAP financial measures and the table of noted items to aid in understanding our results this quarter. Additionally, the slide deck contains detailed information regarding the impact of the Nokia devices and services acquisition on our financial results. Our press release is also on the website and includes an addendum with additional information about our fourth quarter performance.

Microsoft is reporting the financial performance and acquired Nokia devices and services business in a new segment called Phone Hardware. Additionally, the devices and consumer hardware segment was renamed the Computing and Gaming Hardware. The products included in this renamed segment remain the same.

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Current year information reflects the financial performance of the acquired business beginning on April 25, 2014. Any reference to operating expense includes research and development, sales and marketing and general and administrative, but excludes integration and restructuring charges.

Please keep in mind that all growth comparisons we make on the call today relate to the corresponding period of last year, unless otherwise specified all impacted numbers have been adjusted for non-GAAP and noted items which are detailed in our press release in slide deck. We will post the prepared remarks to our website immediately following the call until the complete transcript is available.

Today’s call is being webcast live and recorded. If you ask a question, it will be included in our live transmission in the transcript in any future use of the recording. You can replay the call and view the transcript on the Microsoft Investor Relations website, until July 22, 2015.

During this call, we will be making forward-looking statements which are predictions, projections or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ, because of factors discussed in today’s earnings press release and the comments made during this conference call and in the risk factor section of our Form 10-K, Form 10-Q and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement.

And with that, I’ll turn the call over to Amy.

Amy Hood

Thanks Chris, and good afternoon everyone. This month is an important time for Microsoft, as the leadership team we’re taking bold and decisive action to evolve our organization and culture. This includes difficult steps, but they are necessary to position Microsoft for future growth and industry leadership. Today, we’ll spend more time talking about the significant changes we’re driving. However, let me first start with this quarter’s results, after that Satya will talk more about our past forward and then I’ll share our financial outlook before we take your questions.

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As I think about our strong execution this quarter, there are three things that stand out to me, significant momentum with our cloud services, progress in a number of our consumer businesses and continued cost discipline.

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