Microsoft Corp missed quarterly revenue projections on Tuesday, stung by a stronger currency, slower PC sales, and weaker advertiser spending. The findings were a little miss at a time when investors are bracing for disaster, with inflation raging, consumers cutting down on spending, and many firms beginning to reduce costs.
After-hours trading for the Redmond, Washington-based firm was flat. This year, the stock has lost nearly 25% of its value. Still, Microsoft’s cloud division had its greatest quarter ever, with record reservations for its Azure cloud service, according to Brett Iversen, Microsoft’s general manager of investor relations.
Azure growth was 40%, falling short of Visible Alpha’s 43 percent analyst projection. When foreign exchange considerations were removed, it increased by 46 percent. According to Refinitiv, sales in its Intelligent Cloud segment increased by 20% to $20.9 billion, above the average Wall Street projection of $19.1 billion. Microsoft is under pressure from a rising dollar since it generates almost half of its income outside of the United States. As a result, the business cut its fourth-quarter profit and sales expectations in June.
Foreign currency had a nearly $600 million negative impact on income. A slowing in the PC industry reduced Windows OEM income by more than $300 million. Furthermore, the slowdown in advertising spend reduced income from LinkedIn, Search, and News by more than $100 million. “With Microsoft’s magnitude, it’s difficult for them not to reflect the general economy,” says John Freeman, vice president of equities research at CFRA Research. “We have inflation, which is undoubtedly going to affect consumer demand.”
Net income increased to $16.74 billion, or $2.23 per share, in the fiscal quarter ended June 30 from $16.46 billion, or $2.17 per share, the previous year.
