Microsoft announces earnings below already reduced expectations
SEATTLE - Uncertainty and challenges in the global economy have hit Microsoft, which on Tuesday reported quarterly results that fell short of Wall Street and its own expectations.
The tech giant said it had revenue of $51.9 billion in the quarter ended June 30, up 12% from the previous year. Earnings rose 2% to $16.7 billion.
Results even exceeded Microsoft's lowered expectations. In early June, the company lowered its guidance for the quarter to take into account the growing strength of the US dollar.
“We are obviously incredibly bullish on just about everything. what we have,” Chris Capossela, the company’s chief marketing officer, said after the revised guidelines were released. "It's something we can't control."
Since then, conditions appear to have deteriorated further. Foreign currency challenges spurred by the war in Ukraine and broader economic uncertainty cost Microsoft $595 million in the quarter as it converted sales in Europe, Japan and elsewhere to US dollars. And slowdowns in personal computer production in China and lower consumer demand have led to more than $300 million in sales of its Windows operating system that comes preinstalled on new computers. p>
A slower ad spend on LinkedIn and on Microsoft's search products led to a revenue drop of more than $100 million.
If it weren't for the currency issues, Microsoft's flagship cloud computing platform, Azure, would have grown 46%. Instead, it rose 40%, below what investors expected. Without the stronger dollar, the company's two main lines of business, which it calls Productivity and Business Processes, and Intelligent Cloud, would have met early guidance provided to investors in April.
"Business demand overall was pretty healthy," Brett Iversen, head of investor relations at Microsoft, said on Tuesday. "The long-term thesis of people wanting to move to the cloud to digitize their business, to be able to do more, or to be able to save money - it all still seems intact."
He said this was reflected in strong long-term reservations commitments, including a record number of Azure transactions worth over $1 billion.
Overall revenue for Microsoft's commercial cloud computing offerings, which also includes Office 365 subscriptions, increased 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,” Satya Nadella, the company's chief executive, said in a statement. Microsoft rose 2% to $14.4 billion, driven by a 2% drop in sales of its preinstalled Windows operating system on desktop PCs. Investors were poised to see some weakness as PC shipments are down due to weakened demand and supply chain issues caused by coronavirus lockdowns in China.
Xbox content and services revenue fell 6% as consumers spend less time playing video games.
SEATTLE - Uncertainty and challenges in the global economy have hit Microsoft, which on Tuesday reported quarterly results that fell short of Wall Street and its own expectations.
The tech giant said it had revenue of $51.9 billion in the quarter ended June 30, up 12% from the previous year. Earnings rose 2% to $16.7 billion.
Results even exceeded Microsoft's lowered expectations. In early June, the company lowered its guidance for the quarter to take into account the growing strength of the US dollar.
“We are obviously incredibly bullish on just about everything. what we have,” Chris Capossela, the company’s chief marketing officer, said after the revised guidelines were released. "It's something we can't control."
Since then, conditions appear to have deteriorated further. Foreign currency challenges spurred by the war in Ukraine and broader economic uncertainty cost Microsoft $595 million in the quarter as it converted sales in Europe, Japan and elsewhere to US dollars. And slowdowns in personal computer production in China and lower consumer demand have led to more than $300 million in sales of its Windows operating system that comes preinstalled on new computers. p>
A slower ad spend on LinkedIn and on Microsoft's search products led to a revenue drop of more than $100 million.
If it weren't for the currency issues, Microsoft's flagship cloud computing platform, Azure, would have grown 46%. Instead, it rose 40%, below what investors expected. Without the stronger dollar, the company's two main lines of business, which it calls Productivity and Business Processes, and Intelligent Cloud, would have met early guidance provided to investors in April.
"Business demand overall was pretty healthy," Brett Iversen, head of investor relations at Microsoft, said on Tuesday. "The long-term thesis of people wanting to move to the cloud to digitize their business, to be able to do more, or to be able to save money - it all still seems intact."
He said this was reflected in strong long-term reservations commitments, including a record number of Azure transactions worth over $1 billion.
Overall revenue for Microsoft's commercial cloud computing offerings, which also includes Office 365 subscriptions, increased 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,” Satya Nadella, the company's chief executive, said in a statement. Microsoft rose 2% to $14.4 billion, driven by a 2% drop in sales of its preinstalled Windows operating system on desktop PCs. Investors were poised to see some weakness as PC shipments are down due to weakened demand and supply chain issues caused by coronavirus lockdowns in China.
Xbox content and services revenue fell 6% as consumers spend less time playing video games.
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