Microsoft earnings hurt by slowing PC sales, stronger dollar

MICROSOFT missed estimates for quarterly revenue on Tuesday (Jul 26), hurt by a stronger dollar, slowing sales of PCs and lower advertisement spending.

Shares of the Redmond, Washington-based company fell about 1 per cent in trading after the bell. The stock has lost about 25 per cent this year.

Microsoft also faces pressure from a stronger greenback as it gets about half of its revenue from outside the United States. That led the company to lower its fourth-quarter profit and revenue forecasts in June.

The US dollar index rose over 2 per cent in the quarter ended June and nearly 12 per cent this year, compared to a 1 per cent drop a year earlier for the same period.

Microsoft's Azure cloud service grew by 40 per cent, compared with analyst estimates of 43.1 per cent, according to Visible Alpha.

Microsoft said that advertising revenue fell from LinkedIn, Search and News.

Revenue from its personal computing segment stood at US$14.4 billion, compared with estimates of US$14.68 billion.

Soaring inflation has squeezed spending and weighed on consumer demand for PCs, sending global shipments down 15 per cent in the second quarter, according to research firm Canalys.

Competition in the sector has ramped up since the Covid lockdowns as more businesses seek to move computing and data storage to the cloud.

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It reported revenue of US$51.87 billion in the fourth quarter, compared with US$46.15 billion a year earlier. Analysts on average had expected revenue of US$52.44 billion, according to Refinitiv IBES data.

Net income rose to US$16.74 billion, or US$2.23 per share, during the quarter ended Jun 30, from US$16.46 billion, or US$2.17 per share, a year earlier. REUTERS