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Microsoft Earnings Fall Short of Lowered Expectations 

July 27, 2022

Microsoft’s quarterly earnings fell short of expectations on Tuesday, as global uncertainty and production slowdowns hit the company hard. 

The company posted $51.9 billion in sales for the quarter ending June 30, up 12 percent from the same period last year. Profits rose 2% to $16.7 billion. In June Microsoft lowered its guidance for the quarter, citing the increasingly strong US dollar, but even after that adjustment, the results still missed expectations. 

A slew of unfavorable conditions affected Microsoft over the three month period. The strengthening dollar cost the company $595 million in the quarter, as it converted sales in Europe and elsewhere back into U.S. dollars. 

In China, rolling lockdowns caused production slowdowns, which, coupled with falling consumer demand, resulted in a more than $300 million decline in sales of Windows, its operating system installed on all new PCs. Over the past couple of years, the PC market has thrived in the pandemic, but shipments declined nearly 13% last quarter, according to Gartner, the steepest decline in nine years. 

LinkedIn also suffered, the social media network for professionals suffered a slowdown in advertising spending, and Microsoft’s search products also performed poorly. 

Currency issues affected the company’s cloud computing platform Azure also. It was on track to grow 46% according to Microsoft, but the stronger dollars curtailed that growth to 40%, missing Wall Street expectations. 

On the gaming side of the company, hardware revenue for Xbox fell 11%, and content and service revenue for the console also declined 6%. Overall, revenue from gaming fell 7% year-on-year. 

On an investor’s call, Microsoft executives said they expected some of the challenges of the last quarter to persist, but it expected double digit growth in the next year.

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Filed Under: Cloud, North America, Top Stories, Top Story

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