Status: 01/26/2022 08:31 a.m
The software company Microsoft has made billions in profit and is still hoping for brilliant business with the cloud, teams and Windows 11. But can that help alleviate tech growth concerns on the stock exchanges?
The booming cloud business also brought Microsoft strong growth in the past quarter. The company, based in Redmond, a city in the greater Seattle area, reported net income of $18.8 billion for the months of October through December after the US market closed. Compared to the previous year, this corresponded to an increase of 21 percent.
Sales soared 20 percent to $51.7 billion. Thus, for the first time in the history of the world’s largest software company, revenues broke the $50 billion mark.
270 million Teams users per month
Microsoft launched its new Windows 11 operating system at the beginning of the quarter. Revenues in the Windows business with PC manufacturers grew by a quarter, it said.
Microsoft is betting that personal computers will continue to play a greater role in the long term following the increased working and learning from home in the corona pandemic. The group’s office communication service, Teams, is now used by 270 million users every month.
Cloud business is booming
However, the cloud division Azure caused mixed feelings among investors. In recent years, Microsoft has achieved a solid second place behind the online retailer Amazon with its AWS division.
The trend towards working from home and homeschooling caused by the Corona crisis recently gave Microsoft’s cloud computing business an additional boost. Azure has become a bigger revenue stream for Microsoft over the past year than the Windows operating system.
From October to December alone, Azure revenue climbed 46 percent. However, Microsoft fell short of the high expectations of some analysts. In recent quarters, investors have been used to growth of 50 percent and more.
Microsoft stock by numbers up and down
As a result, Microsoft shares initially fell under the wheels in after-hours US trading, temporarily losing 4.7 percent. Some investors had expected even stronger growth in the cloud business, analyst Brad Reback from Stifel explained the initially negative price reaction.
At the subsequent analyst call, however, Microsoft gave the all-clear. Chief Financial Officer Amy Hood again promised a higher rate of growth for the current quarter. The stock recovered and was temporarily up 3.9 percent before the price gains melted away again.
A tranquilizer for tech investors?
That should help calm tech growth concerns on Wall Street, said analyst Dan Ives of investment firm Wedbush Securities. Technology stocks have been at the center of a sell-off in US stock markets over the past few days, fueled by interest rate concerns.
The development of the Microsoft papers is an example of this: While the shares listed on the Nasdaq technology exchange jumped 51 percent last year, they collapsed by 14 percent in 2022, which was still young. The announcement of the intention to take over the game developer Activision Blizzard for around 70 billion dollars also recently weighed on the Microsoft share price.