Better-than-expected second-quarter results from Microsoft (MSFT) – Get Free Report and consistent development costs for its important cloud computing sector sent its shares much higher in after-hours trading on Tuesday.
Microsoft reported that revenues for Azure, its flagship cloud division, increased 31% year on year, exceeding Wall Street forecasts but slowing from earlier benefits in the mid to high 40-per cent range as corporations continue to pull back on digital infrastructure spending and the greenback continued its 2022 rise.
For the three months ending in December, Microsoft’s fiscal second quarter, overall group sales increased 1.9% to $52.7 billion, just missing analysts’ projections of a $52.97 billion total.
Microsoft’s revenue declined 12% to $16.4 billion, while adjusted profits fell 6.5% yearly to $2.32 per share, barely ahead of the Street expectation of $2.30 per share.
Microsoft said that productivity and enterprise division sales increased 7% to $17 billion, while Intelligent Cloud revenues increased 18% to $21.5 billion, a figure the company had predicted in late October. Personal computing sales dropped 19% to $14.2 billion.
“The next major wave of computing is being born, as the Microsoft Cloud turns the world’s most advanced AI models into a new computing platform,” said CEO Satya Nadella. “We are committed to helping our customers use our platforms and tools to do more with less today and innovate for the future in the new era of AI.”
Microsoft shares rose 4.5% in after-hours trading immediately after the results announcement, to a Wednesday opening bell valuation of $252.36 per.
Microsoft revealed intentions earlier this month to reduce about 5% of its global workforce and deduct $1.2 billion from its current quarter profits in order to ‘align pricing’ with customer demand and raise funding in areas including AI and other advanced applied sciences.
Microsoft said that the cutbacks, which it intends to complete in March, would result in the loss of around 10,000 employees and a 12% decrease in December quarter profitability, but that it will continue to invest in areas such as AI and various advanced applied sciences. In October, the company only expected “modest” personnel growth in the last three months of the year.
The internet titan’s employment losses follow massive layoffs at Amazon (AMZN) – Get Free Report and Meta Platforms (META). Get Free Report late last year, with the former announcing intentions to reduce its global staff by around 18,000 and the latter announcing employment cutbacks of approximately 11,000.
