Microsoft forecast Intelligent Cloud revenue of $21.1
billion to $21.35 billion for its fiscal fourth quarter, driven by strong
growth in its Azure platform. That compared with a Wall Street consensus of
$20.933 billion, according to Refinitiv data.
"If there is any macro headwind, where you have more value
for less price means you win. In our case, when it comes to our commercial
cloud offerings, we have significant advantages on that across the stack,"
Microsoft's chief executive, Satya Nadella, said when asked how the company was
projecting double-digit growth for the next fiscal year.
TECHnalysis Research chief analyst Bob O'Donnell noted
Microsoft's ability to buck industry trends.
“Despite current gloom and doom around big tech, Microsoft's
strong revenues and robust forecast highlight that not all tech is at
risk," O'Donnell said. "For companies that focus on delivering
products and services that businesses need to modernize their operations ...
there's still plenty of upside.”
Microsoft on Tuesday reported profit and revenue for its
fiscal third quarter that beat Wall Street expectations, also benefiting from
demand for its cloud-based services.
Microsoft results indicate that it can keep its
pandemic-fueled sales growing as economies reopen and businesses shift to a
hybrid model of allowing staff to alternatively work from office and home.
That trend is also helping drive up revenue of Windows
products, said Brett Iversen, Microsoft's general manager of investor
relations. "Strength in the commercial PC market drove Windows OEM revenue
up 11 percent," he told Reuters. Third-quarter Azure annual growth of 46.0
percent was steady from the previous quarter and in line with estimates of 45.6
percent growth compiled by Visible Alpha. Still, Azure growth has showed a
steady drop from fiscal 2020 when it was in the 60 percent range.
In contrast, Google parent Alphabet Inc on Tuesday reported
that Google Cloud's growth rate in the first quarter fell slightly to 43.8
percent, from 44.6 percent in the 2021 fourth quarter. Alphabet's first-quarter
revenue came in below expectations, and its shares were down 2 percent in
after-hours trading.
Microsoft's Nadella said the number of $100 million-plus Azure
deals more than doubled year-over-year in the third quarter.
"These numbers show that customers continue to turn to
Microsoft as they accelerate their shift to cloud computing and the current
unsettling economic environment has not yet impacted the company's main growth
driver," said Haris Anwar, senior analyst at Investing.com.
Still, Microsoft chief financial officer, Amy Hood, said the
company's business could be impacted if China's shutdown over the pandemic
extends into May, although the current impact of the shutdowns is already
reflected in Microsoft's outlook.
"However, extended production shutdowns that reach into
May would further negatively impact our outlook across Windows OEM, surface,
and Xbox hardware," she told investors.
The company reported revenue of $49.36 billion in the third
quarter, compared with $41.7 billion a year earlier. Analysts on average had
expected revenue of $49.05 billion, according to Refinitiv IBES data.
Net income rose to $16.73 billion, or $2.22 per share, in
the quarter ended March 31, from $15.46 billion, or $2.03 per share, a year
earlier. That topped analyst targets of $2.19. © Reuters
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