Recent data revealed that Microsoft’s profits fell by double digits during the third quarter of this year as the company faced a slowdown in the personal computer industry and a broader economic slowdown.
The tech giant posted net income of $ 17.6 billion for the quarter, down 14% from a year earlier. Meanwhile, Microsoft’s revenue grew 11% to $ 50.1 billion. Both results were better than analysts expected.
Microsoft’s Azure cloud services unit experienced a 35% increase in revenue from the previous year, but growth was slower than some analysts had hoped for in a division that was one of the biggest positives of the year. company in recent years.
Microsoft said revenue from its Windows OEM operations fell 15 percent from the previous year, which stems from the sharp drop in demand for personal computers in the wake of the pandemic-fueled boom.
Earlier last month, consulting firm Gartner reported that worldwide PC shipments fell 19.5 percent in the third quarter of 2022, compared to the same period last year. This represents the biggest drop in the market since Gartner began monitoring the PC market in the mid-1990s.
Microsoft also said that Xbox content and services revenue fell 3%. Reportedly, the company recentlylayoffs In the Xbox division, among other parts of the company, because – like many other tech companies right now – they are looking to cut costs.
Microsoft shares fell 2% in after-hour trading on Tuesday after the earnings report.
Shares of Microsoft have fallen more than 25% so far this year, amid a broader market crash as inflation continues to rise, geopolitical uncertainty from the war in Ukraine and multiple macro headwinds have devastated the industry. technological.
“In this environment, we are focused on helping our customers do more with less by investing in growth areas and managing our cost structure in a disciplined manner,” Microsoft CEO Satya Nadella said in a quarterly statement on Tuesday.
Harris Anwar, Investing.com chief analyst, described Microsoft’s earnings report as a “mixed bag” in a comment after the results were announced Tuesday.
“It shows that Microsoft is withstanding the economic storm better than other technology players and that its diversified business model plays an important role in doing so,” said Anwar. But he added that slowing growth in cloud computing was a cause for concern.
He continued: “If this slowdown continues, it could hurt investments in the company’s shares, which are considered a safe haven amidst the market turmoil, reflecting these concerns about the company’s shares in extended trading.”
