SEATTLE – Uncertainty and challenges in the global economy have hit Microsoft, reports Tuesday quarterly earnings lower than Wall Street and its own expectations.
The tech giant said it posted revenue of $51.9 billion in the quarter ended June 30, up 12% from a year earlier. Profits rose 2% to $16.7 billion.
The results fell short of Microsoft’s own expectations. At the beginning of June, the company lower Its guide for quarter to growing account strong US dollar.
“We’re obviously extremely bullish on everything else we have,” said Chris Capossela, the company’s chief marketing officer, speak after the revised guide is released. “It’s something we can’t control.”
Since then, conditions appear to have worsened further. Foreign currency challenges fueled by the war in Ukraine and broader economic uncertainty cost Microsoft $595 million in the quarter as it translates into sales in Europe, Japan, and other markets. elsewhere in US dollars. And slowing personal computer production in China and falling consumer demand have slashed sales of the Windows operating system pre-installed on new computers by more than $300 million.
The slowdown in ad spend on LinkedIn and Microsoft’s search products caused revenue to drop by more than $100 million.
If it weren’t for the currency issues, Microsoft’s leading cloud computing platform, Azure, would have grown 46 percent. Instead, it rose 40%, lower than investors expected. Without a stronger dollar, the company’s two core businesses, which it calls Productivity and Business Processes, and Intelligent Cloud, will meet initial guidance it provided investors in April.
Brett Iversen, Microsoft’s head of investor relations, said in an interview on Tuesday: “Overall commercial demand has been pretty good. “The long-term argument that people want to move to the cloud to digitize their business, to be able to do more or to be able to save money – all of that remains intact.”
He said that was reflected in strong long-term booking commitments, including a record number of Azure transactions worth more than $1 billion.
Overall revenue for Microsoft’s commercial cloud services, including Office 365 subscriptions, grew 28% to $25 billion.
“We see a real opportunity to help every customer in every industry use digital technology to overcome today’s challenges and emerge stronger,” said Satya Nadella, the company’s chief executive officer. , said in a statement
Microsoft’s personal computer business grew 2% to $14.4 billion, leading to a 2% decline in sales of the pre-installed Windows operating system on personal computers. Investors are ready to see some weakness because damaged personal computer shipment from weakening demand and supply chain issues due to the coronavirus lockdown in China.
Xbox content and services revenue fell 6% as consumers spent less time playing video games.
With unemployment remained near a 50-year low, LinkedIn, the professional social network Microsoft bought in 2016, grew 26%, down from 34% the previous quarter.
The company said it had $126 million in costs related to downsizing its operations in Russia and another $113 million in expenses to pay severance pay for employees it fired.
Mr Iversen said layoffs were only for “a handful of roles” and that the company expected to expand its headcount in the new financial year, which begins July 1.
