Microsoft Corporation (NASDAQ:MSFT) Q2 2015 Earnings Conference Call - Final Transcript

Jan 26, 2015 • 05:30 pm ET

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Microsoft Corporation (NASDAQ:MSFT) Q2 2015 Earnings Conference Call - Final Transcript

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Presentation
Executive
Amy Hood

first half. Over the remainder of the fiscal year we expect to incur an additional $200 million of restructuring expense. This results in total charges of roughly $1.4 billion which is lower than our previous guidance.

Separately, we still expect integration expense of $100 million per quarter for the remainder of the fiscal year.

As a reminder, other income and expense includes dividend and interest income offset by interest expense and the net cost of hedging. Given the current FX environment, we expect other income and expense to be negative $100 million in Q3.

We now expect our full year tax rate to be between 22% and 24%, this includes the Q2 income tax charge for an IRS audit adjustment as well as the changing geographic mix of our business. In Q3 we expect CapEx to sequentially increase in support of our growing cloud business.

Unearned revenue will continue to benefit from customers moving to our subscription services and high contract renewal rates. We expect to see low single-digit sequential decline in our unearned for Q3 which includes one point drag from FX as new billings will reflect the impact of the strengthening U.S. dollar. Our commercial unearned balance will follow recent historical seasonality when adjusted for FX.

In closing, this quarter was another example of the progress that we are making across this company. Our execution continues to improve and we are making data-driven decisions to improve more investments both shorter-term as you have seen in our marketing and sales adjustments as well as for the longer-term as we adjust our product portfolio.

There are certainly short-term comparability challenges as we anniversary last year's XP Refresh cycle and see the impact of the strengthening U.S. dollar, but we are confident in the underlying health of our business out of the significant innovation we are funding within our prioritized operating budgets and excited to continue gaining share in key strategic markets.

Before I hand it back over to Chris, I would like to announce that we will be webcasting a briefing for the investor community on April 29, in conjunction with our Build Developer Conference in San Francisco. We will share more details as we get closer to the date.

With that, I will turn it back over to Chris and we can move to Q&A.

Executive
Chris Suh

Thanks Amy. With that, we will now move to the Q&A. Operator, can you please repeat your instructions?