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Despite Loss, Microsoft is a Buy After Results: Pros

Thursday, 19 Jul 2012 | 5:54 PM ET

On Thursday Microsoft posted its first quarterly loss as a public company on Thursday. So why are the pros buyers?

This is a confusing report and even a little misleading. Especially because Microsoft has not suffered a quarterly loss since going public in 1986.

But the pros says what matters most for traders is that Microsoft said its unearned revenue increased to 21.1%. “That’s a leading indicator,” explains Tim Seymour.

Seymour is very bullish on the stock. “They have a strong catalyst in Windows 8 which is expected in the fall,” Seymour explains. “And they pay a nice dividend to sit and wait. All told, I'm a buyer.”

Kim Forrest of Fort Pitt Capital says much the same. “We own the stock… we’re delighted with the unearned revenue number and we’d buy more (after these results).”

Don’t be fooled by the loss, adds trader Guy Adami. The loss was largely due to a previously announced hit for writing down the value of its ailing online unit and suffered stagnant sales of its flagship Windows operating system.

"After these results, I think Microsoft pushes to $33 but even at that level I’m a buyer, too. Valuations are still quite reasonable.”

Excluding the multibillion-dollar write-down, which was signaled earlier this month, and factoring in some deferred Windows revenue, Microsoft actually exceeded Wall Street's expectations.

Microsoft Higher After Earnings
The Fast Money traders discuss their trade on Microsoft since the company reported earnings; and Kimberly Forrest, Fort Pitt Capital, weighs in.

Looking at the numbers more closely, Microsoft reported a net loss of $492 million, or 6 cents per share for its fiscal fourth quarter, compared with a profit of $5.87 billion, or 69 cents per share, in the year-ago quarter.

Excluding the write-down, but factoring in that deferred revenue, Microsoft said it earned 67 cents per share in the quarter.

On that basis, Wall Street expected profit of 62 cents per share, according to Thomson Reuters I/B/E/S.

Posted by CNBC's Lee Brodie

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Trader disclosure: On July 19, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long SBUX; Tim Seymour is long FCX; Tim Seymour is long YUM; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Jon Najarian is long AAPL CALL SPREADS; Jon Najarian is long IBM CALL SPREADS; Jon Najarian is long AMZN CALL SPREADS; Jon Najarian is long GOOG CALL SPREADS; Jon Najarian is long MSFT CALLS SPREADS; Jon Najarian is long INTC; Jon Najarian is long CIGX; Jon Najarian is long CME; Jon Najarian is long CBOE; Jon Najarian is long GLUU; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long USB; Joe Terranova is long GS; Joe Terranova is long JPM; Joe Terranova is long YHOO; Joe Terranova is long SBUX; Joe Terranova is long NKE; Joe Terranova is long WFM; Joe Terranova is long AAPL; Joe Terranova is long EMC; Joe Terranova is long NXPI

For Jason Helfstein
Oppenheimer & Co. Inc. makes a market in the securities of GOOG

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