MICROSOFT’S EARNINGS SUFFER DUE TO DECLINE IN COMPUTER SALES

Thu 28 July 2022:

Microsoft, a major player in the US technology industry, reported on Tuesday that its latest quarter’s earnings fell short of projections due to weak demand and supply disruptions from China hurting sales of personal computers. While the tech company’s $16.7 billion profit on $51.9 billion in revenue exceeded market expectations, it lagged behind the same quarter a year earlier.

As per the firm its sales were harmed by the high US currency which made its products more expensive in overseas markets. Prior to a pandemic, the personal computer market had been steadily declining as more people switched to smartphones and tablets, AFP reported.

Dan Ives, a Wedbush analyst in a note to investors said that the decline in earnings was mostly caused due to fluctuating currency exchange rates and the closure of personal computer manufacturing in China. Ives states, “The most important core business; cloud and commercial bookings were relatively rock solid despite fears.” He further added, “The core DNA of the Microsoft growth story is cloud and core Azure growth which was healthy this quarter and appears to have momentum into 2023 despite economic headwinds.”

Chief financial officer at the firm Amy Hood said, “In a dynamic environment we saw strong demand, took share, and increased customer commitment to our cloud platform.”

However, the earnings report stated that the firm lost $300 million in income that would have been generated from Windows operating systems purchased to power the machines due to production shut-in in China and declining demand.

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