On Tuesday, Microsoft forecast second-quarter revenue that was below Wall Street’s target across its business units, stoking fears that macroeconomic difficulties are affecting its external cloud business. PC array.
Revenue growth in the first quarter was Microsoftto a five-year low and the software giant’s stock fell 7% in extended trading.
Microsoft’s cloud business, called Azure, has outperformed the software giant’s revenue growth for years. But in the first fiscal quarter of 2023, that growth has dropped to 35%, and the company is expected to decline again in the current quarter, i.e. the second quarter. Microsoft missed the 36.5% analyst target compiled by Visible Alpha due to a stronger dollar.
Haris Anwar, senior analyst at Investing.com, said: “If this growth deceleration continues, it could harm an investment case in corporate stocks that are seen as havens. safe hiding in the context of market instability”.
The company said it expects its Smart Cloud business to generate revenue of $21.25 billion (approximately Rs 1.75 crore) to $21.55 billion (approximately Rs 1.77 crore) during the quarter. 2, slightly below analyst estimates of $22.01 billion (approximately Rs. 1.81 lakh crore), according to Refinitiv IBES data.
“We expect Azure revenue growth to be about 5 points lower on a constant currency basis,” CFO Amy Hood told analysts during a conference call. That would be 37% growth on a constant currency basis and much lower if exchange rates are taken into account.
Bob O’Donnell, an analyst, said: “In a strange way, everyone expected a disaster when the pandemic hit. And it was quite the opposite. for TECHnalysis Research, adding that right away Even businesses like the cloud can’t escape the impact, but he said Microsoft has diversified its business and is in a good position to weather the tough times.
Producer Windows saw a drop in demand for its popular computer software as a spike in inflation forced businesses and consumers to reduce spending.
Current quarter revenue from the personal computer unit is forecast from $14.5 billion (approximately Rs 1.19 crore) to $14.9 billion (approximately Rs 1.22 crore), below estimates is $16.96 billion (about 1.4 lakh crore).
“The PC market was worse than we expected in Q1,” Brett Iversen, Microsoft’s head of investor relations, told Reuters. “We continued to see that worsen throughout the quarter, which impacted our OEM Windows business.”
Windows OEM business, which includes the operating software Microsoft sells to PC makers, fell 15% year-over-year. Iversen says that part of the business hasn’t suffered much from foreign exchange headwinds, and that the drop is mainly due to the PC market.
However, increased demand for a diverse product portfolio that includes Outlook and Teams has made Microsoft essential for businesses adopting a flexible working model.
Revenue growth in the first quarter was $50.12 billion (about Rs 4.13 Rs.), up 11% year-on-year. The figure was slightly above analysts’ expectations of $49.61 billion (about Rs 4.08k. 4.08kh crore).
Net income fell to $17.56 billion (about 1.44 lakh crore), or $2.35 (about Rs 200) per share, for the quarter ended September 30, from 20, $51 billion (about 1.7 lakh crore), or $2.71 (about Rs 230) per share, a year earlier.
© Thomson Reuters 2022
