MSFT Shares Slide After Top- & Bottom-Line Miss; Blames FX, Putin, & China
Microsoft shares are extending the day's losses after hours following a top- and bottom-line miss
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Earnings: $2.23 per share, adjusted, vs. $2.29 per share as expected by analysts, according to Bloomberg.
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Revenue: $51.87 billion, vs. $52.44 billion as expected by analysts, according to Bloomberg.
CEO Nadella offered some words of hope...
“We see real opportunity to help every customer in every industry use digital technology to overcome today’s challenges and emerge stronger,” said Satya Nadella, chairman and chief executive officer of Microsoft.
“No company is better positioned than Microsoft to help organizations deliver on their digital imperative – so they can do more with less.”
Revenues were a miss across all the segments:
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*MICROSOFT 4Q PRODUCTIVITY REV $16.60B, EST. $16.68B
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*MICROSOFT 4Q MORE PERSONAL COMPUTING REV. $14.36B, EST. $14.67B
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*MICROSOFT 4Q INTELLIGENT CLOUD REV. $20.91B, EST. $21.07B
The3 'Intelligent Cloud" - which includes the Azure public cloud for application hosting, SQL Server, Windows Server and enterprise services - was up 20% but still missed expectations.
The company said that Azure revenue grew 40%, 46% in constant currency, after analysts on average predicted a 43% standard growth rate and Microsoft guided for a constant-currency growth rate of roughly 47%.
“In a dynamic environment we saw strong demand, took share, and increased customer commitment to our cloud platform. Commercial bookings grew 25% and Microsoft Cloud revenue was $25 billion, up 28% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.
“As we begin a new fiscal year, we remain committed to balancing operational discipline with continued investments in key strategic areas to drive future growth.”
MSFT shares are down over 5% after-hours, trading at the lowest in six weeks...
As a reminder, Microsoft had already reduced its quarterly guidance for income and revenue because of changing foreign-exchange rates.
Microsoft really kitchen-sinked the blame-game for what drove the miss...
In the fourth quarter of fiscal year 2022, evolving macroeconomic conditions and other unforeseen items had an impact on financial results beyond what was included in our forward-looking guidance provided on April 26, 2022.
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Unfavorable foreign exchange rate movement within the quarter negatively impacted revenue and diluted earnings per share $(595) million and $(0.04), respectively. Additional details are provided in the Earnings Call Slides.
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Extended production shutdowns in China that continued through May and a deteriorating PC market in June contributed to a negative impact on Windows OEM revenue of over $(300) million
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Reductions in advertising spend contributed to a negative impact on LinkedIn as well as Search and news advertising revenue of over $(100) million
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With the ongoing war in Ukraine, we made the decision to significantly scale down our operations in Russia. As a result, we recorded operating expenses of $126 million related to bad debt expense, asset impairments, and severance.
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As part of a strategic realignment of our business groups, we recorded employee severance expenses of $113 million, excluding Russia
They didn't blame Trump?
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