Microsoft’s earnings suffer as computer sales decline

The US technology giant, Microsoft on Tuesday said that its earnings for the recent quarter fell short of expectations as the sales of personal computers suffered due to low demand and supply delays from China. The tech firm beat market expectations with a $16.7 billion profit on $51.9 billion in revenue but fell short of the same quarter year earlier. As per the firm its sales were harmed by the high US currency which made its products more expensive in overseas markets. Prior to a pandemic, the personal computer market had been steadily declining as more people switched to smartphones and tablets, AFP reported.

Dan Ives, a Wedbush analyst in a note to investors said that the decline in earnings was mostly caused due to fluctuating currency exchange rates and the closure of personal computer manufacturing in China. Ives states, “The most important core business; cloud and commercial bookings were relatively rock solid despite fears.” He further added, “The core DNA of the Microsoft growth story is cloud and core Azure growth which was healthy this quarter and appears to have momentum into 2023 despite economic headwinds.”

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Chief financial officer at the firm Amy Hood said, “In a dynamic environment we saw strong demand, took share, and increased customer commitment to our cloud platform.”

However, the earnings report stated that the firm lost $300 million in income that would have been generated from Windows operating systems purchased to power the machines due to production shut-in in China and declining demand. 

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Furthermore, after the pandemic, the prevalence of online commerce, employment, socialising, and entertainment has rekindled demand for desktop computers but isn’t sure when will this trend continue. 

Ad revenue of the company at news, search and LinkedIn suffered due to reduced marketing expenditure. The firm also logged $126 million in operating costs connected to stopping operations in Russia amid the Ukraine crisis. 

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However, the company’s CEO Satya Nadella said, “We see real opportunity to help every customer in every industry use digital technology to overcome today’s challenges and emerge stronger.”

(With inputs from agencies)


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