NewsUSAMicrosoft profit falls on sharp rise in costs

Microsoft profit falls on sharp rise in costs

Microsoft closed the year 2022 with a quarter of record revenue, but a slowdown in growth and a drop in profitability. The sharp increase in operating costs weighed on its results and helps explain the unprecedented downsizing that the company has launched and which will mean the layoff of some 10,000 employees, around 5% of the workforce. Even so, the financial health of the company is enviable. Between October and December (which is the second quarter of its fiscal year) it entered a total of 52,747 million dollars, 2% more than a year earlier, and achieved a profit of 17,371 million, with a fall of 2%.

Revenue growth is the lowest in five years (since the drop in the quarter ended June 30, 2017), but part of it is to blame for the strength of the dollar against other currencies. When translated into dollars, those sales in weaker currencies add up to less. Without the currency impact, billing would have increased by 7%.

Read Also:   Starbucks hires veteran Pepsi executive as new CEO

Although the gross margin deteriorates a bit, the gross margin is still growing, but the increase in administrative expenses (+7%), sales and marketing (+6%) and, above all, research and development (+ 19%), cause the operating result to fall by 8% and the net profit, by 12%. The drop in results would have been less, 4%, had it not been for the foreign exchange impact.

These heavy investments in R&D allow the company to prepare for the future, although Microsoft has already been changing the profile of the company. Sales of products (such as office programs) are declining and the company is increasingly dependent on services, especially in the business market, which shields it somewhat from the slowdown in consumption due to high inflation. Cloud computing is the great engine of results and artificial intelligence, the clear commitment to the future.

Read Also:   US believes Russia's maneuvers in Ukraine may create one of "the largest" refugee crises

Microsoft Cloud revenue was $27.1 billion, up 22% (up 29% in constant currency). Sales of Windows and other programs installed directly on computers are falling sharply, but services (including Windows 365), especially servers and Azure cloud computing, are growing strongly. Although its weight in the group is less, the income of Linkedin, the social network for professionals, increased by 10%, while that of Xbox (its video games) fell by 12%.

“The next great wave of computing is dawning as Microsoft Cloud turns the world’s most advanced artificial intelligence models into a new computing platform,” Satya Nadella, Microsoft president and CEO, said in a statement. “We are committed to helping our customers use our platforms and tools to do more with less today and innovate for the future in the new era of artificial intelligence.”

Read Also:   Last minute of the war in Ukraine, live | The US accuses Russia of financing related political parties in other countries with 300 million

Within this commitment, the company has just agreed to a multi-year investment of about 10,000 million dollars in OpenAI, the company that has developed the ChatGPT artificial intelligence tool.

In the whole of the first half of its fiscal year (from July to December), Microsoft achieved record revenues of 102,869 million dollars (+6%) and a net profit of 33,981 million (-13%). The net result is weighed down again by currencies and the increase in costs, to which is added a higher provision for income tax.

THE COUNTRY of the morning

Wake up with the analysis of the day by Berna Gonzalez Harbor

RECEIVE IT

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest Posts

Read More
More