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Microsoft’s earnings suffer as computer sales decline

US technology giant Microsoft on Tuesday said its earnings for the latest quarter fell short of expectations as sales of personal computers suffered due to low demand and supply delays. from China. The tech firm beat market expectations with $16.7 billion in revenue on $51.9 billion in revenue but fell short of the same quarter last year. According to the company, its sales have been hurt by the high US currency which makes its products more expensive in overseas markets. Before a pandemic, the personal computer market was steadily declining as more people switched to smartphones and tablets, AFP reported.

Dan Ives, an analyst at Wedbush in a note to investors said that the decline in earnings was mainly due to fluctuations in currency exchange rates and the shutdown of personal computer manufacturing in China. Ives says, “The most important core business; Cloud and commercial bookings are relatively strong despite the fears.” He added, “The core DNA of Microsoft’s growth story is cloud and core Azure growth that was healthy this quarter and appears to have momentum in 2023 despite economic challenges.”

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

However, the earnings report said the company lost $300 million in revenue from Windows operating systems bought to power the machines due to the shutdown of production in China and reduced demand.

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In addition, after the pandemic, the spread of online commerce, work, socializing, and entertainment has rekindled the demand for desktop computers but it is uncertain how long this trend will continue.

The company’s ad revenue in news, search and LinkedIn suffered due to lower marketing costs. The company also logged $126 million in operating expenses connected to the shutdown of operations in Russia amid the Ukraine crisis.

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However, the company’s CEO Satya Nadella said, “We see a real opportunity to help every customer in every industry use digital technology to overcome today’s challenges and become more resilient.”

(With inputs from agencies)


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