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Microsoft misses expectations, points to exchange rates and weakened PC market londonbusinessblog.com

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Microsoft announced its fourth quarter results Tuesday, missing the expectations of Wall Street. The company reported revenue of $51.9 billion for the quarter ended June 30, up 12% year over year. analysts were expecting about $52.5 billion. Net profit rose 2% to $16.74 billion. This is considered the slowest revenue growth for Microsoft since 2020.

Microsoft lowered his Q4 forecast in June to between $51.9 billion and $52.7 billion, with foreign exchange expected to disrupt quarterly earnings. And for the most part, the company wasn’t wrong.

Microsoft quoted that currency movements negatively impacted revenue by $595 million and reduced earnings per share by 4 cents.

The software company continues to face other challenges from a deteriorating PC market – its biggest drop in years – as well as extended production shutdowns in China and reduced operations in Russia.

PC shipments saw a massive drop, and Gartner predicts global PC sales could fall nearly 10% this year.

Here are other key figures from the report:

  • Xbox content and services revenues declined slightly by 6%. Hardware sales decreased by 11%.
  • Windows OEM (Original Equipment Manufacturer) revenue fell 2%
  • On the plus side, Microsoft’s Intelligent Cloud segment generated $20.91 billion in revenue, up 20%. Azure and other cloud services revenue grew 40%, compared to 46% last quarter.
  • The company also said LinkedIn continues to grow as revenue is up 26%. However, this is lower than the 34% growth in the past quarter.
  • Office Commercial products and cloud services revenue grew 9%, driven by 15% Office 365 Commercial revenue growth.
  • Office consumers are also up 9% year-over-year.
  • Microsoft 365 Consumer reached 59.7 million subscribers.

Microsoft’s earnings follow the announcement that it will be the ad technology partner for Netflix’s upcoming ad-supported tier.

The news also comes as the general technology market takes a beating as companies delay hiring and announce layoffs. At the beginning of this month, Microsoft laid off less than 1% of its 180,000 employees per Bloomberg. The company also said it would delay hiring in the future.

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