Microsoft
Like many tech companies, Microsoft is in belt-tightening mode as it seeks to rein back aggressive spending on talent and looks to cut back on unprofitable ventures. Overall, Microsoft shares are down 29.9% YTD which is more than the S&P 500's
Inside the Numbers
In its fiscal Q1, Microsoft reported $2.35 per share in earnings, topping expectations of $2.30 per share. This was a 14% decline from last year. In contrast, revenue was up 11%, also topping expectations at $50.1 billion vs $49.6 billion. It also saw gross margins come in below expectations at 69.2% vs 69.8%.
Next quarter, the company sees revenue growth at about 2% with a range between $52.4 billion and $53.4 billion. However, this was below expectations of $56.1 billion. Its operating margin also came in slightly below expectations at 40% vs 42%.
The company attributed cyclical pressures as business spending declines, while cost pressures abound such as higher energy costs for the cloud computing division. Intelligent Cloud, which includes Azure, contributed $20.3 billion, a 20% gain but just under expectations of $20.4 billion. Azure revenue was up 35%, a slight deceleration from 40% in the previous quarter. Next quarter, the company sees Azure growth, reaching 37%, just under expectations of 39%.
Productivity and Business Processes saw $16.5 billion in revenue, a 9% increase, and topping expectations of $16.1 billion. More Personal Computing came in at $13.3 billion which was above expectations of $13.1 billion, but a slight decline from last year due to weakness in video game and PC sales.
It was also a notable quarter for Microsoft as revenue from cloud segments came in higher than revenue from its legacy, software businesses.
