Microsoft CEO Satya Nadella speaks at the company’s Ignite Spotlight event in Seoul on Nov. 15, 2022. Nadella delivered the keynote speech at the event hosted by the company’s Korean division.
Songjun Cho | Bloomberg | Getty Images
Microsoft to report its fiscal second quarter results after the close of regular trading on Tuesday.
Here’s what analysts expect:
- income: $2.30 per share, according to Refinitiv.
- income: $52.96 billion, according to Refinitiv.
Sales growth is expected to be just 2.3% year-over-year, which would be Microsoft’s weakest growth in any period since 2016.
The company is facing problems on all fronts. When CEO Satya Nadella announced 10,000 job cuts last week, he noted that customers in all industries around the world had taken a more cautious approach due to the challenges of the recession.
As of Monday’s close, Microsoft shares were down 18% over the past year, slightly underperforming the Nasdaq.
The growth engine of Microsoft’s Intelligent Cloud division is the Azure public cloud. In October, executives said the company’s engineers were busy helping customers be more efficient with their Azure infrastructure services. Last week, Nadella wrote that “we are now seeing how they are optimizing their digital spend to do more with less.”
Microsoft’s Windows division, which is in the More Personal Computing division, is calculated with a retreat in the PC market. Technology industry researcher Gartner estimated that in the fourth quarter of 2022, the PC business will grow at its slowest pace since the company began tracking the market in the mid-1990s.
The third unit, Productivity and Business Processes, contains the Microsoft 365 productivity suite, formerly known as Office. In recent days, some analysts said they expected slower growth in seats purchased by business customers.
The decision to cut staff “demonstrates a commitment to protecting profitability despite top-line volatility,” Raymond James analysts wrote in a note to clients on Monday. They recommend buying Microsoft stock.
Microsoft said the layoffs, along with changes to its hardware lineup and lease consolidation charges, would result in $1.2 billion in costs and a negative impact on earnings of 12 cents per share.
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