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Najarian: Does Microsoft Have Head in the Clouds?

On Thursday after the bell, Microsoft released earnings and results left Wall Street fairly underwhelmed.

The software giant reported a dip in fiscal second-quarter profit on Thursday, as weaker sales of its Xbox game system in the holiday quarter offset a solid start for its new Windows 8 operating system.

However, OptionMonster Jon Najarian isn't concerned by the weakness. He isolated a data point in the Microsoft release that he finds bullish for the stock broadly.


"Server sales were very strong," he said.

Najarian believes that's a sign that Microsoft has enormous growth ahead – in the cloud. "They're going to put office on the cloud – I think that will be key."

Trader Tim Seymour, founder of EmergingMoney.com, also sees good things. Although he concedes the PC business is getting worse, he believes most of that is priced in. And on a valuation basis, Seymour said the stock is cheap. "I could get excited about this stock."

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Windows Phone Summit 2012
Photo by: Jon Fortt for CNBC.com
Windows Phone Summit 2012

Karen Finerman, president of Metropolitan Capital, is also bullish - at least relatively. "This company has a rock solid balance sheet," she said. "I can't help but wonder if there will be a floor because of its valuation."

Trader Keith McCullough, CEO of Hedgeye Risk Management, isn't so sure. He said that the market is trading in a way that isn't terribly intuitive. Although Microsoft is cheap, he's not sure that will buoy shares in the near term.

"Cheap stocks are getting cheaper and expensive stocks are getting more expensive – people are willing to pay up for momentum stocks. It may not feel right but that's how it is right now," he said.

Looking at the numbers a little more closely, Microsoft posted fiscal second-quarter earnings excluding items of 76 cents per share, down from 78 cents a share in the year-earlier period.

Revenue increased 3 percent to $21.46 billion from $20.89 billion a year ago.

Analysts had expected the company to report earnings excluding items of 75 cents a share on $21.53 billion in revenue, according to a consensus estimate from Thomson Reuters.


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Trader disclosure: On January 24,2013, the following stocks and commodities mentioned or intended to bementioned on CNBC's "Fast Money" were owned by the "FastMoney" traders; Jon Najarian is long RIMM CALLS; Jon Najarian is long SBUX; Jon Najarian islong DAL; Jon Najarian is long NVDA CALLS; Jon Najarian is long NVDA CALLS; Jon Najarian is long UAUA CALLS;Jon Najarian is long TPX; Jon Najarian is long SCSS; Karen Finerman is long AAPL, callspreads, put spreads; Karen Finerman is long BAC; Karen Finerman is long JPM;Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is longMSFT; Karen Finerman is long GOOG; Karen Finerman is long PAY; Karen Finermanis short JCP; Karen Finerman is long PLCE; Karen Finerman is short SPY; KarenFinerman is long SPY Puts; Karen Finerman is short IRT; TimSeymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; TimSeymour is long SBUX; Tim Seymour is long MSFT; Tim Seymour is long F; KeithMcCullough is long SBUX

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