Microsoft Predicts Strong Double-digit Revenue Growth

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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 US$20.3 billion to US$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 US$51.87 billion, compared with US$46.15 billion a year earlier, and analysts on average forecast revenue of US$52.44 billion. Net income rose to US$16.74 billion, or US$2.23 per share during the quarter ended June 30. The result marks a slight growth from US$16.46 billion, or $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% due to foreign exchange factor, missing the 43%. Revenue in its broader Intelligent Cloud division rose 20% to US$20.9 billion, above Wall Street’s average target of US$19.1 billion.

Several reasons led Microsoft’s revenue to fall below analyst estimates. Foreign exchange weighed on revenue by nearly US$600 million. A slowdown in the PC market hit Windows OEM revenue by more than US$300 million. The slowdown in advertising revenue affected LinkedIn and Search as well as ad revenue for news by more than US$100 million.

The sources for this piece include an article in Reuters.

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