Microsoft posts tepid sales growth as cloud business slows - BNN Bloomberg

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Microsoft Corp. reported tepid fourth-quarter sales growth, held back by decelerating demand for cloud-computing services while the software maker waits for a revenue boost from new artificial intelligence-powered products.

Profit in the period ended June 30 was US$2.69 a share and sales rose 8 per cent to US$56.2 billion, the software maker said in a statement Tuesday. While overall results topped analysts’ projections, Azure cloud services revenue growth slowed to 27 per cent, excluding currency fluctuations, from 31 per cent in the previous quarter.

The shares fell about 1 per cent following the report, after climbing to US$350.98 at the close in New York. The stock rose 18 per cent in the three months ending in June, outpacing the 8.3 per cent increase in the S&P 500 Index in that period. Last week, shares of Microsoft reached a record high, fueled by optimism for new AI strategies and products.

Annual sales growth moderated to 7 per cent in 2023, the company said, after five straight years of increases above 10 per cent. Microsoft fired 10,000 workers in the March quarter, including in key businesses like Azure and security software. The Redmond, Washington-based company made a smaller number of additional layoffs in July, in areas like sales and support.

Microsoft’s sales from Windows operating system software sold pre-installed on computers fell 12 per cent in the June quarter, a period when global PC shipments dropped 13 per cent, according to market research firm IDC. Though that industry decline marked the sixth straight quarterly contraction in the market, total unit sales were better than forecast, IDC said.

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