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Microsoft posted better-than-expected profits in the last three months of 2022 on January 24, thanks to its strong cloud and productivity software business. However, sales of devices such as the Surface laptop and his XBox game console have fallen, and weak earnings forecasts for 2023 have disappointed investors. Microsoft shares fell more than 3% in today’s (January 25) morning trading before recovering.
The Seattle-based tech giant reported revenue of $52.75 billion for the three months ended December 31, with net income of $17.6 billion, or $2.32 per share. Earnings per share beat analyst estimates by 3 cents, but earnings growth has slowed since 2016.
About 40% of quarterly revenue came from Microsoft’s intelligent cloud segment, which grew 18% from a year ago. This segment includes Azure, Windows Server, SQL Server, Nuance, and Enterprise Services. The productivity and business process segment, which includes Microsoft 365, LinkedIn, and Dynamics, grew 7% year-over-year to reach $16.8 billion, representing 30% of total revenue.
This growth was held back by Microsoft’s personal computing segment, which saw sales drop 19% from a year ago. The company’s device sales will continue to decline in her 2023, her CFO Amy Hood told analysts on her Jan. 24 conference call.
Microsoft expects revenue for the quarter ending March 31 to be between $50.5 billion and $51.5 billion, slightly below analyst estimates and up just 3% for the year.
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