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Microsoft earnings fall short as computer sales sag

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San Francisco (AFP) – Microsoft on Tuesday said its earnings in the recently ended quarter fell shy of expectations as personal computer sales suffered from a production holdup in China and reduced demand. .

The US technology giant reported a profit of $16.7 billion on revenue of $51.9 billion, topping the same quarter last year but missing market forecasts.

The revenue stumble was largely due to foreign exchange rates and the closing of personal computer factories in China, Wedbush analyst Dan Ives said in a note to investors.

Microsoft said the strong US dollar made its offerings more expensive in foreign markets, hurting sales.

“The most important core business; cloud and commercial bookings are relatively strong despite the fears,” said Ives.

“The core DNA of Microsoft’s growth story is cloud and core Azure growth that was healthy this quarter and looks to have momentum in 2023 despite economic headwinds.”

Microsoft shares rose about 4 percent in after-market trading following the release of earnings numbers.

“In a dynamic environment we’re seeing strong demand, engagement, and increased customer commitment to our cloud platform,” said Microsoft chief financial officer Amy Hood.

The closings of computer production facilities in China in May, and a deteriorating market for personal computers, cost Microsoft about $300 million in revenue it could have made from Windows operating systems it bought for use. the machines, the earnings report said.

The personal computer market continued to decline before the pandemic, as people turned to smartphones or tablets.

A massive shift to shopping, working, socializing and playing from home is driving demand for desktop computing power, but it remains to be seen whether that appetite will remain post-pandemic.

Ad revenue on Microsoft’s online news, search, and career social network LinkedIn has suffered as companies cut marketing budgets due to broader economic problems, the company said.

The tech veteran based in the US state of Washington also logged $126 million in operating expenses related to scaling back its operations in Russia due to the country’s invasion of Ukraine.

Microsoft saw consumers spending less on Xbox videogame content in the quarter compared to the same period last year, in a possible sign that more people are playing in the real world as pandemic restrictions ease. .

However, Microsoft’s cloud, business and productivity offerings continue to evolve.

“We see a real opportunity to help every customer in every industry use digital technology to overcome today’s challenges and emerge stronger,” said Microsoft chief executive Satya Nadella.

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