Microsoft posted double-digit revenue declines in the three months to September as the company faced a slowdown in the personal computing industry and a broader economic recession.
The tech giant reported on Tuesday that its net profit for the quarter was $17.6 billion, down 14% from last year. Meanwhile, Microsoft’s (MSFT) revenue rose 11% to $50.1 billion. Both results exceeded analyst expectations.
Microsoft’s Azure cloud services division posted a 35% year-over-year revenue increase, but the growth was slower than some analysts had hoped for what has been one of the company’s brightest divisions in recent years.
Other parts of the tech companybusiness declined. According to Microsoft, revenue from its Windows OEM business fell 15% year-on-year as demand for personal computers plummeted after the boom caused by the pandemic. Consulting firm Gartner reported earlier this month that worldwide PC shipments in the third quarter of 2022 were down 19.5% compared to prior year. It is the steepest market decline since Gartner began tracking his PC market in the mid-1990s.
Microsoft also said that revenue from Xbox content and services fell by 3%. The company has reportedly laid off employees, including the Xbox division, recently. Because, like many other tech companies right now, they’re trying to keep costs down.
Their shares in Microsoft fell 2 percent in after-hours trading on Tuesday following the earnings release.
Microsoft’s stock has been down from 25% since the beginning of the year amid a broad market slump as rising inflation, geopolitical uncertainty from the war in Ukraine, and macroeconomic headwinds continue to wreak havoc on the tech industry.
Satya Nadella, CEO of Microsoft, said in a statement on Tuesday announcing the quarterly earnings, “In this environment, we’re focused on helping our customers do more with less while investing in secular growth areas and managing our cost structure in a disciplined way.”
Investing.com senior analyst Harris Anwar called Microsoft’s earnings report “mixed” after Tuesday’s earnings call.
Anwar said. But he added that the slowing cloud computing growth was cause for concern.
Anwar said, “It shows that Microsoft is weathering the economic storm better than other technology players, and its diversified business model is playing a big role in doing so.”
Anwar said, “If this growth deceleration continues, it could harm an investment case in the company’s stock which is considered a safe haven amid the market turmoil, with these concerns reflected in the company’s shares being down in extended trading.”
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