Azure grew 31%, while analysts on average were expecting 30.5% growth from the cloud-computing product Microsoft does not provide full revenue or profit figures for Azure, even though Amazon and Alphabet Inc. Microsoft reported cloud revenue of $21.5 billion, up from $18.33 billion a year ago and narrowly topping the average analyst estimate of $21.43 billion, according to FactSet.
“We are particularly keen for updates on this deal, and would pay special attention to what sorts of concessions Microsoft is prepared to make at this point, and at what point the concessions make the deal unattractive to shareholders,” Macquarie Research analysts wrote of the Activision acquisition, while maintaining a neutral rating but decreasing their price target to $232 from $234. ATVI,įor $69 billion, though it is facing pushback from regulators worldwide.
Microsoft is also still in the process of acquiring videogame-publishing giant Activision Blizzard Inc. And lastly, we are going to lead in the AI era, knowing that maximum enterprise value gets created during platform shifts.” This in turn sets us up to participate in the secular trend where digital spend as a percentage of GDP is only going to increase. “This is an important time for Microsoft to work with our customers, helping them realize more value from their tech spend and building long-term loyalty and share position while internally aligning our own cost structure with our revenue growth. “In this environment, we remain convicted on three things,” Microsoft Chief Executive Satya Nadella said in launching the company’s conference call. Opinion: Microsoft’s big move in AI does not mean it will challenge Google in search The day before its earnings report, the company officially announced a long-expected third investment in ChatGPT creator OpenAI, which includes plans to incorporate the technology into services such as Microsoft’s Azure cloud-computing offering and Bing search engine. Microsoft executives instead point to opportunities to grow despite the slowdown in business spending.
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“We expect that the head-count reduction announcement … will likely be accompanied by a lower revenue outlook for the second half of the FY, but the actions taken by the company are an illustration of how Microsoft can dynamically adjust its cost base to preserve EPS and free cash flow given the macro choppiness,” Evercore ISI analysts wrote in a preview of the earnings, while maintaining an outperform rating and $280 target price on the stock. ‘It is an employer’s market’: Tech layoffs may have turned the Great Resignation into the Great Recommitment
Wall Street analysts believed the move signaled concerns about revenue growth. Microsoft announced thousands of layoffs last week, part of a wave of job cuts from Big Tech companies that increased their workforces at a rapid pace in the early years of the COVID-19 pandemic. Microsoft’s forecast takes on extra importance this quarter, as Microsoft executives told investors at the end of the last fiscal year that they expect double-digit percentage growth in revenue and operating margins, but a lot has happened since then. Analysts on average were expecting fiscal third-quarter revenue of $52.42 billion, according to FactSet. Analysts on average expected earnings of $2.29 a share on sales of $52.99 billion, according to FactSet.įor the current quarter, Microsoft executives expect revenue of $50.5 billion to $51.5 billion, according to Hood’s guidance. Revenue increased to $52.75 billion from $51.7 billion in the holiday quarter of 2022. The company also reported that severance, impairment and lease-consolidation charges cost it 12 cents a share, which would lead to adjusted earnings of $2.32 a share Microsoft executives did not provide adjusted earnings a year ago, and typically stick to GAAP profit readings. Microsoft reported fiscal second-quarter earnings of $16.43 billion, or $2.20 a share, a decline from $2.48 a share a year ago.
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