(San Francisco) Microsoft, which has launched a massive layoff plan, issued a disappointing financial forecast on Tuesday, a sign that economic conditions are finally catching up with even the cloud giants.
The Redmond group (northwestern United States) saw its growth decelerate and its profits decline in the last quarter of 2022.
From October to December, it achieved a turnover of 52.7 billion dollars, or +2% over one year, while it is used to double-digit growth.
Its net profit stood at 16.4 billion, down 12% year on year, according to its earnings release released on Tuesday.
When they were published, these figures initially reassured the market, which was expecting worse. Microsoft took about 4% on Wall Street during electronic trading after the close of trading.
But the stock lost 1.31% after the analyst conference call, where the company said it expects revenue of between $50.5 billion and $51.5 billion for the current quarter, less than expected by the market. .
Microsoft expects weaker demand than last year for its personal computer business, such as its Windows operating system.
Above all, the growth of remote computing (cloud) should continue to slow down, in particular that of the Azure platform.
During the last quarter, the “intelligent cloud” activity, which brings together its servers and data analysis services, brought in $ 21.5 billion in the second quarter of its staggered fiscal year (+ 18% year on year).
Azure grew the business, but with lower growth than usual, at 31%.
Savings and investments
“Some cloud contracts could be scaled back as companies reevaluate their data center plans” because of budget challenges, notes Dan Ives of Wedbush.
But according to this analyst, the appetite of the government and the army for these infrastructures is undeniable, and many companies have not yet made their digital transition.
“We believe that the transition to the cloud (of companies and organizations) remains below 50% and therefore represents a massive opportunity for Microsoft” despite the poor economic situation, he specifies.
The company announced last week the dismissal by the end of March of almost 5% of its workforce, or around 10,000 employees, to cope with economic uncertainty and changing priorities of its customers.
A “difficult choice”, explained boss Satya Nadella in a letter to employees, but necessary “in a sector that does not forgive those who do not adapt to platform changes”.
The group also indicated on Monday that it would invest “several billion dollars” to expand its partnership with the specialist in artificial intelligence (AI) OpenAI, creator in particular of the conversational robot ChatGPT, which arouses enthusiasm and dread even at the giant. Google.
Microsoft will “transform the most advanced AI models into a new computing platform,” promised boss Satya Nadella, quoted in the earnings release on Tuesday.
He also hopes to finalize the takeover of video game giant Activision Blizzard by the end of the year, despite the obstacles posed by American and European regulators.
The US competition authority (FTC) launched legal proceedings in December to block the $69 billion acquisition of the publisher of titles such as call of duty and candy Crush.
The European Union has opened an investigation to find out whether the transaction would make Activision games exclusive to Xbox, the game console marketed by Microsoft.