BENGALURU/SAN FRANCISCO: Microsoft Corp yesterday (July 26) forecast revenue this fiscal year would grow by double digits, driven by demand for cloud computing services and sending shares up 5%.
The strong outlook shows Microsoft continues to benefit from the pandemic-led shift to hybrid work models and comes at a time when investors are bracing for disaster, with inflation roaring and consumers cutting spending.
Despite the positive forecast for the fiscal year starting July 1, Microsoft results for the fourth quarter amounted to a slight miss, hurt by a stronger dollar, slowing sales of personal computers (PC) and lower advertiser spending.
Still Microsoft had its best quarter for its cloud business with record bookings for its cloud service called Azure, said Brett Iversen, Microsoft's general manager of investor relations.
Microsoft 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. Shares of the Redmond, Washington-based company have fallen about 25% this year.
“With Microsoft being the size that they are, it’s hard for them not to reflect the overall economy,” John Freeman, vice president of equity research at CFRA Research. “We’ve got inflation and that’s obviously going to dampen consumer demand.”
Microsoft 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 June 30, from US$16.46 billion, or US$2.17 per share, a year earlier. – Reuters