Microsoft has announced its financials for the past quarter, which has been bolstered by growth in its Azure cloud-services even as Windows and Xbox sales slump. In its statement, Microsoft announced profits of $2.32 a share in the period ended Dec. 31, and overall sales rose 2% to $52.7 billion.
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Microsoft’s Azure cloud-computing business gained 38 percent in sales. Despite the positive results, Microsoft has announced massive layoffs of 10,000 employees. Other than Azure, however, the company’s results pale in comparison. Computer sales have plummeted in recent months, meaning Windows sales have also suffered. This trend is expected to continue in a global economy under a lot of pressure.
“The sentiment has gotten considerably worse than the last three months,” said Gil Luria, an analyst at D.A. Davidson. The quarter’s results may have been a “relief to the stock, because actual expectations on the downside are even lower than that.”
In 2022, Microsoft’s stock price declined by nearly 30 percent. The company has had many years of sustained growth, which has come to a crashing halt recently. Also mostly driven by the company’s cloud business, Microsoft has reported double-digit revenue growth for a long time. Now, CEO Satya Nadella acknowledged that the industry is going through a period of deceleration and will need to adjust.
“During the pandemic there was rapid acceleration. I think we’re going to go through a phase today where there is some amount of normalization in demand,” Nadella said in an interview at the World Economic Forum in Davos, Switzerland. “We will have to do more with less — we will have to show our own productivity gains with our own technology.”
According to CFO Amy Hood, the company remains optimistic about the cloud-computing market, and pointed to broader economic issues as the biggest challenge to the business. “We’re not immune to the macro impact and I do think companies are more cautious, but it’s very early innings when it comes to cloud demand.”
