Harder than expected computer market hits Microsoft Windows; cloud growth is slowing | Biden News

Harder than expected computer market hits Microsoft Windows;  cloud growth is slowing

 | Biden News


Oct 25 (Reuters) – Microsoft Corp ( MSFT.O ) posted its slowest quarterly revenue in five years on Tuesday, as tough macroeconomic conditions hit PC sales and slowed cloud growth that has weighed on earnings for years.

The company reported revenue of $50.12 billion for its fiscal first quarter, up 11% year over year, and slightly above analysts’ expectations of $49.61 billion, according to Refinitiv IBES data.

“The Street fears softer guidance from Nadella and that is contributing to the weakness after hours,” said Daniel Ives, an analyst at Wedbush Securities, referring to CEO Satya Nadella’s earnings call.

“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 during the quarter, which impacted our window OEM business.”

Shares of the Redmond, Washington-based company fell 2% in trading after the bell.

Windows OEM business, which includes the operating software that Microsoft sells to PC manufacturers, fell 15% year over year. Iversen said that part of the business did not have much impact from foreign exchange headwinds and the impact was largely computer market driven.

However, a diverse portfolio of products including Outlook and Teams have made Microsoft essential for businesses adopting flexible working models, helping it retain and attract customers at a time when a broader economic slowdown has cut corporate spending.

The Azure cloud computing has also benefited companies looking to digitize their operations, winning big deals as businesses lean on technology to cut costs.

Azure grew 35% in the three months ended Sept. 30, but it missed the 36.5% analyst target compiled by Visible Alpha due to a stronger dollar. Excluding currency factors, Azure was up 42%.

Microsoft’s broader Intelligent Cloud division posted a 20% rise in revenue to $20.33 billion, nearly in line with estimates of $20.37 billion, according to Refinitiv.

“We continue to see healthy demand across our commercial businesses including another quarter of solid bookings,” Chief Financial Officer Amy Hood said in the earnings statement.

Net income fell to $17.56 billion, or $2.35 per share, during the quarter ended Sept. 30, from $20.51 billion, or $2.71 per share, a year earlier.

Reporting by Tiyashi Datta in Bengaluru and Jane Lanhee Lee in Oakland, California. Editing by Devika Syamnath, Peter Henderson and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.


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