Microsoft results hit by strong dollar and weaker PC sales

Microsoft released this Tuesday (26) quarterly results below market estimates, reflecting slowing PC sales, dollar appreciation and lower advertising spending by advertisers.

The company’s shares, which have accumulated a 25% drop this year, were stable after the trading session.

Microsoft had the best quarter in the cloud computing business, called Azure by the company, said Brett Iversen, general manager of investor relations at Microsoft.

Azure’s growth was 40%, below the 43% analyst forecast compiled by Visible Alpha. In the broader cloud computing division, Intelligent Cloud, revenue increased 20% to $20.9 billion, above the average forecast of $19.1 billion, according to Refinitiv.

Microsoft faces pressure from a stronger dollar as it derives about half of its revenue from operations outside the US. The US dollar index rose more than 2% in the quarter to June and nearly 12% this year, down from 1% a year earlier for the same period.

The exchange impacted revenue by nearly $600 million and the downturn in the PC market hit revenue of more than $300 million. The advertising slowdown, meanwhile, has hit LinkedIn’s social network revenue by more than $100 million.

“With Microsoft being this size, it’s hard not to reflect the overall economy,” John Freeman, vice president of equity research at CFRA Research.

Softer consumer demand also hit video game revenue, which fell 7% year-over-year due to a drop in sales of Xbox consoles, content and services, the company said.

Microsoft had revenue of $51.87 billion in the quarter, up from $46.15 billion a year earlier. Analysts, on average, had expected revenue of $52.44 billion, according to data from Refinitiv.

Microsoft’s net income rose to $16.74 billion, or $2.23 per share, for the quarter ended June 30 from $16.46 billion, or $2.17 per share, a year ago. before.