Microsoft blames turbulent economy as it misses profit targets | business news

Microsoft missed its profit targets on Tuesday, blaming the turbulent economy.

The tech giant reported profit of $16.7 billion (£13.8 billion) in the fourth quarter – or $2.23 per share.

Revenue came in at $51.9bn (£43.1bn), up 12% year-on-year.

According to FactSet, analysts had forecast $2.29 per share and $52.94 billion (£44bn) in revenue.

Microsoft blamed “evolving macroeconomic conditions and other unforeseen factors” for its financial performance.

In response to that country’s invasion of Ukraine, supply issues in China have been cited due to strict COVID-19 lockdowns, a deteriorating PC market and the suspension of its operations in Russia.

Alphabet Inc, on the other hand, performed more positively, with earnings almost in line with analysts’ expectations.

Google parent company said second-quarter revenue jumped to $69.69 billion (£57.9 billion) from $61.88 billion (£51.3 billion) a year earlier – almost in In line with median expectation of $69.88bn (£58bn).

“Ad revenue continues to rise despite concerns about over-consumption of demand”

Google’s ads business accounted for 81% of quarterly revenue, with revenue hitting $56.29bn (£46.8bn) – just below the median estimate of $56.67bn (£47.1bn) .

Investors had expected ad revenue to falter as companies cut budgets to cope with rising costs.

Companies like Alphabet are raking in increasingly less cash from overseas sales due to the strong U.S. dollar, and their shares are down more than 27% this year.

Total earnings were $16 billion (£13.3 billion) – or $1.21 per share, down from the median estimate of $1.29.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Alphabet’s steadfast presence in our daily lives means it falls through the bucket for marketing teams, which is why advertising revenue is still growing despite fears of demand curbing too much.

“A positive reaction to the latest quarterly numbers has been incredibly hard-earned given the negative market sentiment towards the broader technology.

“Alphabet’s indispensable status for marketers makes it better able to weather inflation since its customer base is about as die-hard in the industry. However, it is not completely immune from residual problems due to a difficult economic backdrop.”

Microsoft shares fell 0.5% in after-hours trading, while Alphabet rose 3% according to the companies’ earnings.

Microsoft ended the regular session down 2.7% and Alphabet ended the day down 2.3%.

Microsoft blames turbulent economy as it misses profit targets | business news

Source link Microsoft blames turbulent economy as it misses profit targets | business news

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