Microsoft will likely coast on cloud revenue while PC shipments scare investors - OnMSFT.com
We're hedging our bets! You can now follow OnMSFT.com on Mastadon or Tumblr!

Microsoft will likely coast on cloud revenue while PC shipments scare investors

Microsoft is on deck to report its quarterly earnings later today and the street is lowering its estimates in accordance with AMD and Intel's expected weaker performance.

While it's expected that Microsoft will continue to post growth in its burgeoning cloud business, analysts are preparing for more modest improvements quarter over quarter while also keeping an eye on predicted 'lower-than-expected' Windows licensing revenue due to fewer PC shipments for this earnings report.

Gartner tracked a 12.6% drop in PC sales back in July and with AMD loweing its preliminary estimates, it's unlike the situation has gotten much better since then.

A consortium of 14 analysts from prominent firms polled by CNBC peg Microsoft's Azure cloud growth in the 35-36% range for this quarter which is a relative departure from its 40% growth recorded last quarter.

In the midst of an organizational tightening where the company released up to 1,000 employees recently, representing less than 1 percent of its total workforce, Microsoft is also restructuring its reporting and prepped investors with a new FY23 Investors Metrics report earlier this month.

The new report lists the five areas that have been updated and where product categories have shuffled to include "HoloLens revenue, previously in the Intelligent Cloud segment, moved to the More Personal Computing segment" and will be measured in the PC accessories revenue alongside Surface revenue growth.

A bit of an obfuscating move by Microsoft for investors interested in augmented hardware as a standalone business for the company, but with the recent Meta partnership news, it's clear Microsoft is looking to turn the HoloLens into a tech licensing endeavor while pivoting its Windows augmented reality software into yet another platform akin to its Azure efforts.

Microsoft just announced its Windows 11 2022 Update, a new features pack began rolling out and just a couple of weeks ago it hosted a new hardware event, all items not expected to impact its quarterly earnings report this time around.

While the market was raised by the prospect of tech earnings on Monday, Microsoft shares have seen a 26% deflation over the year and we'll have to see how the company's call is received later today before there is potentially more shaved off the stock in afterhours trading.

Share This Post:

Older

China emerging as next battleground in Microsoft vs. Sony video game console wars

Bethesda just dropped a new Redfall trailer in time for Halloween

Newer