Microsoft results for the quarter deteriorated
Key software products from Microsoft – Windows, Office and server solutions, has lost some of its luster, and their sales in the last fiscal quarter grew only by 4.6% compared with a year earlier, it said in a statement.
Growth was weaker than analysts ‘ expectations and below the growth the previous two quarters – 9.5% and 10.5%, writes the Wall Street Journal.
In addition, Microsoft gave its financial forecast for the fiscal year that ends in June. Her expectations were below the estimates of wall street.
A preliminary plan for the strong growth was a double-edged sword for Microsoft, because it contributed to high expectations after a year in which CEO Satya Nadella showed smart strategic steps, as well as a desire to change the ways the company does things. Now the question is whether the disappointing sales of software products of the company a sign that Microsoft is no longer such a big force in the market.
Main chief financial officer Amy hood said that the relatively poor results partially due to the fact that customers prefer the traditional version of Office installed on computers, and online-Office 365 – brings less revenue for Microsoft, at least in the short term.
Sales of personal computers are also not good enough, which leads to a decrease of proceeds from the sale of the Windows operating system and Office Suite, which are often sold together with the computer. Recent changes in sales in some markets show a shift towards cheaper laptops, a trend that is not in favor of Microsoft because the company earns less money with these devices.
Hood argues that Microsoft’s corporate customers continue to buy the products of the company and enter into long-term supply contracts software and other products that will be useful for the company in the long term.
According to the company, one of its engines sales will be cloud computing. Sales of Microsoft cloud products, which include Office 365, has increased more than two times during the quarter, reaching 1.3 billion dollars. The cloud business brings in only 5% of the total revenues of the company, but is important for the future of Microsoft.
Hood notes that the problems in Japan and China and a strong dollar against foreign currencies had a negative impact on the revenues of Microsoft. According to the company, the strong dollar will reduce by 4 percentage points of revenue growth in the quarter that ends in March.
For the quarter ended 31 December, the company reported a net profit of $ 5.86 billion, or 71 cents per share. In the same period a year earlier, the profit was 6.56 billion, or 78 cents a share.
In General, the company’s revenues increased by 8% to $ 26.47 billion.