Microsoft Surpasses Profit Expectations With Strong Cloud Performance

Microsoft (MSFT) on Tuesday announced its first quarter of fiscal 2022 results after the closing bell, easily beating analysts’ earnings expectations, with cloud revenue up 36% year-on-year. ‘other. The stock was flat on the news.

Here are the report’s most important numbers compared to what analysts expected, as compiled by Bloomberg.

  • Returned: 45.3 billion dollars against 43.93 billion dollars expected

  • Earnings per share: $ 2.71 vs. $ 2.07 expected

  • Smart cloud: $ 16.98 vs. $ 16.58 billion expected

  • Productivity and business processes: $ 15.04 vs. $ 14.70 billion expected

  • More personal computing: $ 13.31 vs. $ 12.68 billion expected

Microsoft CEO Satya Narayana Nadella speaks at a Microsoft Live Event in the Manhattan neighborhood of New York City on October 26, 2016. REUTERS / Lucas Jackson

“Digital technology is a deflationary force in an inflationary economy,” Microsoft CEO Satya Nadella said in a statement. “The Microsoft cloud provides the end-to-end platforms and tools organizations need to navigate this time of transition and change. “

Microsoft’s cloud business is the largest segment of the business, helping to push the tech giant’s market capitalization to over $ 2 trillion, and it continues to grow.

Microsoft recently started rolling out its latest version of Windows, called Windows 11, but the global chip shortage, which is expected to last until at least 2022, is limiting sales of new computers.

Nonetheless, the company managed to beat analyst expectations in the segment, and Windows OEM revenue grew 10% in the quarter.

While business demand for desktops is strong, the chip crisis is limiting the availability of laptops, according to research firm Gartner. Adding to the problem is the fact that the availability of COVID-19 vaccines is forcing consumers to spend on other products outside of PCs, according to Gartner Research Director Mikako Kitagawa. In other words, as people move back into the world, they are more interested in expenses other than computers, like dining out.

“Global PC shipments totaled 84.1 million units in the third quarter of 2021, an increase of 1% from the third quarter of 2020, according to preliminary results from Gartner, Inc.,” Kitagawa said in a statement. Press. “As COVID-19 vaccines become more widely available, consumer and education spending has started to shift away from PCs to other priorities, slowing market dynamics. “

Microsoft’s gaming segment has also been hit by the chip shortage. Demand for the company’s Xbox Series X and Series S consoles has significantly outstripped supply, leaving consumers looking for systems in the aftermarket, where they go for hundreds above their asking prices of $ 499. and $ 299, respectively.

This segment saw its revenues increase by only 2%.

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