Microsoft earnings hurt by slowing PC sales, stronger dollar

A Microsoft logo is seen in Los Angeles, California U.S. November 7, 2017. REUTERS/Lucy Nicholson

July 26 (Reuters) – Microsoft Corp (MSFT.O) missed estimates for quarterly revenue on Tuesday, hurt by a stronger dollar, slowing sales of PCs and lower advertisement spending.

Shares of the Redmond, Washington-based company fell about 1% in trading after the bell. The stock has lost about 25% this year.

Microsoft also faces pressure from a stronger greenback as it gets about half of its revenue from outside the United States. That led the company to lower its fourth-quarter profit and revenue forecasts in June.

The U.S. dollar index rose over 2% in the quarter ended June and nearly 12% this year, compared to a 1% drop a year earlier for the same period.

Microsoft's Azure cloud service grew by 40%, compared with analyst estimates of 43.1%, according to Visible Alpha.

Microsoft said that advertising revenue fell from LinkedIn, Search and News.

Revenue from its personal computing segment stood at $14.4 billion, compared with estimates of $14.68 billion.

Soaring inflation has squeezed spending and weighed on consumer demand for PCs, sending global shipments down 15% in the second quarter, according to research firm Canalys.

Competition in the sector has ramped up since the COVID lockdowns as more businesses seek to move computing and data storage to the cloud.

It reported revenue of $51.87 billion in the fourth quarter, compared with $46.15 billion a year earlier. Analysts on average had expected revenue of $52.44 billion, according to Refinitiv IBES data.

Net income rose to $16.74 billion, or $2.23 per share, during the quarter ended June 30, from $16.46 billion, or $2.17 per share, a year earlier.

Reporting by Akash Sriram in Bengaluru; Editing by Devika Syamnath and Lisa Shumaker

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Source:www.reuters.com