Microsoft is banking on demand for cloud computing services as it forecasts double-digit revenue growth this year.
For the first quarter ending September 30, the intelligent Cloud division was forecast to generate C$20.3 billion to C$20.6 billion, with the upper end slightly above analyst forecasts.
Despite the positive forecast for the fiscal year beginning July 1, Microsoft’s fourth-quarter earnings were slightly below analyst estimates.
Microsoft reported fourth-quarter revenue of C$51.87 billion, compared with C$46.15 billion a year earlier, and analysts on average forecast revenue of C$52.44 billion. Net income rose to C$16.74 billion, or C$2.23 per share during the quarter ended June 30. The result marks a slight growth from C$16.46 billion, or C$2.17 per share, a year earlier.
Microsoft’s cloud business had its best quarter and growth is expected to continue in subsequent quarters. Azure grew by 40 per cent due to foreign exchange factor, missing the 43 per cent. Revenue in its broader Intelligent Cloud division rose 20 per cent to C$20.9 billion, above Wall Street’s average target of C$19.1 billion.
Several reasons led Microsoft’s revenue to fall below analyst estimates. Foreign exchange weighed on revenue by nearly C$600 million. A slowdown in the PC market hit Windows OEM revenue by more than $300 million. The slowdown in advertising revenue affected LinkedIn and Search as well as ad revenue for news by more than C$100 million.
The sources for this piece include an article in Reuters.