The Microsoft store is pictured in the Manhattan borough of New York City, New York, U.S., June 26, 2020. REUTERS/Carlo Allegri
July 22, 2020
(Reuters) – Microsoft Corp’s <MSFT.O> flagship cloud computing business Azure reported sales growth of under 50% for the first time ever on Wednesday, sending the tech giant’s shares down 3%.
Microsoft said revenue in its Intelligent Cloud segment rose 17% to $13.4 billion, with 47% growth in Azure. Analysts on average had expected revenue of $13.09 billion, according to IBES data from Refinitiv.
Azure’s growth rate is the best direct measure of competition with rivals like Amazon.com Inc’s <AMZN.O> AWS and Alphabet Inc’s <GOOGL.O> Google Cloud, as Microsoft does not break out revenue from Azure.
Microsoft’s total revenue rose 13% to $38.03 billion in the fourth quarter ended June 30, beating estimates of $36.5 billion, according to IBES data from Refinitiv. (https://bit.ly/3jxrriP)
The revenue beat was powered by gains in its More Personal Computing unit, as more people globally turned to its products to work and game remotely during coronavirus-induced lockdowns.
Revenue from the unit, the largest by sales, rose 14% to $12.9 billion, beating analysts’ estimates of $11.46 billion. The unit includes Windows software, Xbox gaming consoles, online search advertising and Surface personal computers.
Microsoft said its professional networking site, LinkedIn, was hurt by the weak job market and reductions in advertising spend.
The company said its commercial cloud, a closely watched metric by investors, surpassed $50 billion in annual revenue for the first time this year.
Net income fell to $11.20 billion, or $1.46 per share, from $13.19 billion, or $1.71 per share, a year earlier.
(Reporting by Stephen Nellis in San Francisco and Munsif Vengattil in Bengaluru; Editing by Maju Samuel)