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Premarket: Microsoft Hardware Sales Up 68%; Samsung Warns of Smartphone Slowdown

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Microsoft device sales are up, but profit is not.

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After a sharp sell-off in emerging markets overnight, US stocks are likely to fall again today, marking the second straight week of losses. Microsoft Corporation (NASDAQ:MSFT) and Starbucks Corporation (NASDAQ:SBUX) could see heavy trading on the heels of their earnings announcements.

Ahead of the opening bell, futures on the Dow Jones Industrial Average (INDEXDJX:.DJI) were down 0.55% at 16,062. S&P 500 (INDEXSP:.INX) futures dropped 0.60% to 1,813.20, and Nasdaq (INDEXNASDAQ:.IXIC) futures declined by 0.55% to 3,594.00. No domestic economic announcements are due out today.

Microsoft reported encouraging growth in enterprise and hardware sales, offsetting the decline in the consumer PC business. Net profit rose by 3% to $6.56 billion as revenue rose 14.3% year-over-year to $25.52 billion. Earnings per share of $0.78 beat expectations by a dime. Windows revenue fell 3%, but devices and hardware jumped 68%. Microsoft sold 7.4 million Xbox consoles, up from 5.9 million a year ago, and Surface tablet sales doubled to $893 million. But the transition from a software powerhouse to a "devices and services" company is not quite finished. Though hardware revenue is on the rise, gross profit from hardware fell to $411 million from $762 million a year ago. Investors welcomed the report, and the stock rose 2.4% in overnight trading.

Starbucks reported that profit rose by a quarter in the December 2013 quarter, but sales fell short of estimates. Net profit rose to $540.7 million, or $0.71 per share. Revenue was up 12% to $4.24 billion. Stock analysts had expected $0.69 per share in earnings on $4.3 billion in sales. Comparable store sales rose 5%. CEO Howard Schultz said that in-store traffic was hurt by online shopping in the 2013 holiday season.

Procter & Gamble (NYSE:PG) reported lower-than-expected sales for its fiscal second quarter. Earnings per share of $1.21 beat expectations by a penny, but revenue of $22.28 billion missed by $100 million. The consumer giant said that its numbers were affected by unfavorable currency and commodity prices during the quarter.

Shares of consumer tech companies like Apple (NASDAQ:AAPL) fell after its arch-rival Samsung (OTCMKTS:SSNLF) reported that its growth for the smartphone market is slowing. The Korean conglomerate's net profit rose 5.4% in the fourth quarter, compared to a 25.6% rise in the third quarter. Samsung also warned that demand for smartphones, tablets, and other gadgets will decline due to seasonal weakness.

Emerging markets stocks and currencies took a dive overnight and affected stocks on every continent. Asian markets ended the day far lower, with the Nikkei (INDEXNIKKEI:NI225) losing nearly 2%. The Argentine peso suffered its biggest drop since 2002. Gold prices rose 0.5% to $1,268.70.


Twitter: @vincent_trivett
No positions in stocks mentioned.
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