Microsoft reported its weakest revenue growth in six years after the market closed on Tuesday. The main indices in the US slipped slightly into the red.
So far, the balance sheet season has been a mixed bag. Various major companies have posted weak quarterly data in recent days – including IT giant Microsoft and conglomerate 3M. In addition, several technology companies announced mass layoffs in view of the changed economic situation. Microsoft wants to part with 10,000 employees – about 5% of the workforce. Alphabet, parent of Google, is laying off 12,000 employees. Amazon CEO Andy Jassy announced in early January that the Internet company would cut more than 18,000 jobs.
Those developments weighed on the tech-heavy Nasdaq 100, which ended the trading day down 0.27% at 11,814. In late trade, the S&P 500 was almost unchanged at 4,016 points. The Dow Jones closed up 0.03% at 33,742 points.
Microsoft shares have been weighed down by a decline in earnings and a weak outlook
Microsoft presented data for the second quarter of the fiscal year on January 24 after the market closed. During that period, the company had total sales of $52.7 billion. This is an increase of just 2% compared to last year’s numbers. Although sales were in the range of $52.35 billion to $53.35 billion indicated by CEO Satya Nadella, analysts had forecast $56 billion. The most important sales driver was still the cloud division. Here, revenue rose 22% to $27.1 billion. Microsoft earned 39% less with the Windows operating system. Net profit fell 12% to $16.4 billion. Diluted earnings per share were $2.20. Microsoft shares fell 0.59% on Wednesday.
Investors were particularly disappointed by the outlook for the current quarter. Among other things, Microsoft predicts that Azure growth will slow by 4% to 5%. Now Nadella is using artificial intelligence to get the company back on track. Microsoft is investing billions more in Open AI, the company behind the ChatGPT program.
Warner Bros Discovery up
Media company Warner Bros. Discovery was among the best performers on Wednesday, jumping 8.59%. Shares of e-commerce platform eBay also rose 4.80%. At the top of the Dow Jones is Walt Disney with +1.99%.
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