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Microsoft under pressure after slowest revenue growth in six years

Stock Markets Jan 25, 2023 04:42AM ET
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By Davit Kirakosyan and Geoffrey Smith 

Investing.com --  Microsoft (NASDAQ:MSFT) shares are set to open under pressure later Wednesday after the software giant reported its slowest sales growth in six years and warned that there may be worse to come. 

Revenue grew only 2% year-over-year in the three months through December to $52.7 billion, missing the consensus estimate of $53.12B. While earnings were fractionally ahead of expectations at $2.32 a share, they were still down 12% on the year at $16.4B. 

Microsoft's numbers have significant implications for the rest of the U.S. stock market, given its massive reach across all sectors of the economy. While there was little shocking about them, they added to impressions that the U.S. economy will face a tough time this year. The company had already announced some 10,000 job cuts earlier in the week. 

Analysts zoomed in on the slowdown in growth at Microsoft's intelligent Cloud business division, which has posted years of spectacular growth and had largely defied the post-pandemic slowdown in Internet- and remote-themed business until recently. 

Intelligent Cloud revenue was up 24% year-on-year in constant currencies in the quarter but Microsoft sees it edging up to around $21.85B in the current quarter, an implicit annualized growth rate of only 6.6%, according to Investing.com calculations. Analysts had expected around $22.14B.

Microsoft's other businesses are already showing more signs of struggling with the broader slowdown in the economy. Revenue in its personal computing business fell 19%, or 16% in constant currency terms, with demand for laptops and PCs fading as the world returned to office-based work after the pandemic.

Similarly, revenue from its Xbox gaming division fell 12%, or 8% in constant currency, as locked-down consumers got off their couches.

Microsoft under pressure after slowest revenue growth in six years
 

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Comments (6)
Ma Lu
Ma Lu Jan 25, 2023 10:41AM ET
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A turning point for MS and all shareholders!
Ernie Keebler
Ernie Keebler Jan 25, 2023 6:25AM ET
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Stock market is not a true market it's a huge ponzi/pyramid scheme that sinks when early investors want to take profits and not enough new foolish money comes in to support. Manipulated by company buybacks to falsely support prices and a lot of other Tom foolery. Even the fed comes in to manipulate to keep the precious valuations artificially high
Lazaros Kotsidis
Lazaros Kotsidis Jan 25, 2023 6:25AM ET
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Exactly
First Last
First Last Jan 25, 2023 6:25AM ET
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Then by your definition, what markets are NOT "ponzi/pyramid scheme"?
Prabhat Negi
Prabhat Negi Jan 25, 2023 5:12AM ET
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these people last night said markets up as MS beats expectations.. now this .. shows exactly what's wrong with the system. it's all manipulated to fool you from top to bottom
Lucas Gabriel Sajkiewicz
Lucas Gabriel Sajkiewicz Jan 25, 2023 5:12AM ET
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It was enough watching the report. Pump was completely fake.
jason xx
jason xx Jan 25, 2023 5:12AM ET
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Growth is growth
MBA BC
MBA BC Jan 25, 2023 5:12AM ET
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Easily fixed, don't listen.
Hanna Christin
Hanna Christin Jan 25, 2023 5:12AM ET
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Lucas Gabriel Sajkiewicz  people were trading the stock without listening to the conference call...
Bill Riley
Bill Riley Jan 24, 2023 6:37PM ET
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Microsoft is WOKE
jason xx
jason xx Jan 24, 2023 6:37PM ET
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You're so cool I have to put a jacket on
Maximus Maximus
Maximus Maximus Jan 24, 2023 6:37PM ET
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bill due to your comment, microsoft have decided to quit the woke tech industry and instead start producing banjos and assault rifles
Paul Har
Paul Har Jan 24, 2023 5:40PM ET
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Tech bubble
James Johannsen
James Johannsen Jan 24, 2023 5:40PM ET
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everything bubble
Mark Deren
Mark Deren Jan 24, 2023 5:26PM ET
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Wow! Microsoft beats by $0.02 on earnings and misses by $420M on revenues and is going to be up nearly 5%? Because Cloud revenue was up? This is like NFLX missing numbers horribly but stock rising like a rocket because subscribers beat! These are mature companies, not small startup where things like subscribers and one source of revenue us up while others stagnate. Ridiculous!
Ronald Warren
Ronald Warren Jan 24, 2023 5:26PM ET
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Exactly!!
Thanos theBear
Thanos theBear Jan 24, 2023 5:26PM ET
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Microsoft sucks arse
Derick Lim
Derick Lim Jan 24, 2023 5:26PM ET
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scammers
Simon Meszaros
Simon Meszaros Jan 24, 2023 5:26PM ET
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You may have already noticed and that is rather new phenomena that some stocks are used as a value store and hedge against inflation. So why surprised then? Stock market is only huge absorber of excessive money. It can reverse some day, probably not there yet. Stocks are more natural than anything..
 
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