Cloud division saves Microsoft from weak Xbox and Windows performance

bottom line: Microsoft reported positive year-on-year revenue growth of $52.7 billion for the three-month period ended December 31, 2022, largely due to the high performance of its cloud computing services.

The $52.7 billion catch represents a modest two percent increase over the same period a year earlier. Net income, however, fell 12 percent year-on-year to $17.37 billion, while diluted earnings per share were $2.32 (down 11 percent from the fourth quarter of 2021).

Microsoft Productivity and Business Processes (Office, LinkedIn, Dynamics) generated Revenue was $17 billion, up 7 percent from the previous year, while its intelligent cloud computing division grew 18 percent to $21.5 billion, helping to offset losses in other areas.

Windows OEM revenue fell 39%, as did the Microsoft device category. Revenue from Xbox content and services also fell 12% compared to the 2021 holiday season.

Microsoft recently expanded its partnership with OpenAI, building on a partnership that was first struck in 2016 and confirmed in 2019 and 2021. Microsoft described the new deal as a multi-year, multi-billion dollar investment that will accelerate breakthroughs in artificial intelligence. According to bloombergRedmond is committing an additional $10 billion.

The Washington tech giant announced last week that it would cut its overall workforce by 10,000 jobs. With the cuts, Microsoft joins a slew of other big tech companies that are cutting their workforce after significant hiring during the pandemic.

Related Reading: These are exit packages that tech giants like Google, Meta, and Amazon are offering laid-off employees.

looking aheadMicrosoft expects fiscal year 23 Q3 revenue to be between $50.5 billion and $51.5 billion. The biggest takeaway here is that Microsoft expects revenue from its “More Personal Computing” division (Windows OEM, Xbox, devices, and search) to fall to $11.9-12.3 billion from $14.2 billion last year. quarter.

In related news, Xbox and Bethesda are currently streaming their Direct developer a demo that promises an inside look at some of the biggest games coming to Xbox, PC and Game Pass.

Image credit: Valent Lau, Tadas Sar

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