The technology giant Microsoft Tonight (Tuesday) published the economic results for the fourth quarter of the fiscal year 2022. In recent years, Microsoft has shown strong growth in profit and revenue, with the global corona epidemic in the background. The company, which operates many cloud services, has benefited from people being forced into homes and relying more on the digital services it offers.
The company reports an adjusted profit of $2.23 per share, thus missing analysts’ forecasts, who estimated that it would report a profit of $2.29 per share. In the corresponding quarter last year, the company reported $2.17 per share. The company’s stock is down in late trading.
On the top line, the company reports revenues of $52.87 billion, when analysts’ forecasts were for revenues of $52.3 billion. Compared to the corresponding quarter last year, when revenues stood at 46.2 billion dollars.
A long history of defying market forecasts
In the previous quarter, the giant Microsoft reported a profit and revenues higher than the market’s expectations, and behind it a long history of bypassing the forecasts – when the last time it missed the forecasts in the profit line was in the first quarter of 2016. In the revenue line, it also tends to surprise well, and it has been showing consistent growth in sales for years long
The rampant inflation and the changes in the dollar especially affect the tech giants, and investors will watch closely how Microsoft navigates through all these challenges. Analysts expect lukewarm performance relative to the company’s standard. Earnings per share and revenues are expected to grow, but at the slowest rate in recent quarters. In the last two quarters, Microsoft’s stock reacted with a decline after the publication of the financial statements, a trend that reversed after the investors’ and shareholders’ meeting, in the framework of which the forecast for the continuation is usually given.
At the beginning of June, Microsoft lowered its forecasts for the fiscal quarter that ended on June 30. Microsoft issued a profit warning and stated at the time that it was mainly due to the strengthening of the dollar.
The Activision Blizzard deal is still not going quietly
Besides all this – Microsoft faces fire from regulators and legislators: the purchase of Activision Blizzard is still a big headache for it. At the beginning of the year, it was reported that Microsoft is acquiring the gaming company for about 68 billion dollars in cash – the largest transaction in the history of gaming.
The purchase is not going quietly, and both the US and the UK fear that it is a violation of competition. Senators sent a letter to the US Federal Trade Commission (FTC) demanding an investigation into the deal, and Lina Kahn (chairman of the commission) announced that she is looking into it. Recently, the Competition and Markets Authority in Great Britain also announced that it had opened an investigation into the deal, and whether it could harm competition and lead to worse results for consumers.
At the same time, Microsoft had to freeze many jobs in the company recently. Bloomberg reported that the job freeze also reached core products such as the Azure cloud platform and its cyber division. A check on the LinkedIn network (owned by Microsoft) shows that the number of advertised jobs from Microsoft worldwide has dropped by 46%. According to the report, the job freeze at the software giant began already in May, and mainly affected the Windows, Office and Times teams. In June, it was announced that the company is also reducing recruitment in the field of information security. Last week it announced that it would lay off about a percent of its employees, meaning a number lower than 18,000 worldwide.