Financial Associated Press (Shanghai editor Liu Rui) news, after Tuesday's eastern time, Microsoft released the second fiscal quarter of fiscal 2022 financial results. Microsoft's sales and profits grew in the fiscal second quarter, but revenue growth in Azure's cloud computing services business decelerated, raising concerns among some investors that the segment's growth rate had peaked.
After the release of the earnings report, Microsoft's stock price fell by more than 6% at one point in after-hours trading, but then rose rapidly, and Microsoft rose slightly by about 1% after hours as of press time. In normal trading, Microsoft shares fell 2.66 percent to $288.49.
The slowdown in Azure revenue growth has raised concerns
In the fiscal second quarter ended Dec. 31, Microsoft's revenue rose 20 percent to $51.7 billion, better than Analysts' estimates of $50.88 billion, as reported by Refinitiv. Microsoft's fiscal second-quarter net profit was $18.765 billion, up 21% compared to a net profit of $15.463 billion in the same period last year.
Quarterly growth rate of Microsoft departments
By division, Microsoft's smart cloud division, which includes server products such as Azure Public Cloud, GitHub, and Windows Server, generated $18.33 billion in revenue, up 25.5 percent, slightly higher than the $18.3 billion widely expected by analysts surveyed by StreetAccount.
Revenue from Azure and other cloud services grew 46 percent year-over-year, ending four consecutive quarters of more than 50 percent growth, though analysts who were better than the StreetAccount survey had expected Azure to grow by 45.3 percent.
Revenue from Microsoft's PC business, which includes Windows operating systems, advertising, devices, and games, totaled $17.47 billion, up 15.5 percent year-over-year and higher than StreetAccount's general expectation of $16.56 billion. Microsoft said Windows licensing sales rose 25 percent in the fourth quarter.
As the first anniversary of Microsoft's launch of the Xbox X series and S series of consoles passed, Xbox hardware revenue grew by 4%. Last quarter, Xbox hardware revenue grew 166 percent.
Microsoft's gaming business currently accounts for nearly 11 percent of total revenue. This month, Microsoft announced a $68.7 billion acquisition of game publisher Activision Blizzard, the largest deal in Microsoft's 46-year history.
Revenue from Microsoft's productivity and business process divisions, which include Office, Dynamics and LinkedIn, was $15.94 billion, up 19 percent year-over-year, better than analysts surveyed by StreetAccount had previously expected $15.86 billion.
Microsoft CEO Satya Nadella said on a conference call with analysts that the company achieved $15 billion in security revenue in 2021, up nearly 45 percent. In 2020, security revenue increased by more than 40%.
Microsoft's stock price may hit the worst monthly performance in 12 years
As of Tuesday's close, Microsoft stock had fallen 14 percent since early 2022 and was likely to see the stock's worst monthly performance since 2010. However, this is mainly due to the general sell-off of technology stocks in the context of the Upcoming Interest Rate Hike by the Federal Reserve.
"We're the bulls here," said Christopher Ouimet, portfolio manager at Newtown Square investment firm Logan Capital Management, who remains firmly bullish on Microsoft's prospects.
"We think there's a lot of noise in the market right now. Most high-growth stocks have been sold off, but we really feel that going from 1.5% to 1.8% in the 10-year Treasury yield doesn't mean microsoft's Azure contract can't be sold. ”
He believes that investors may have ignored the impact of the exchange rate. Under the influence of the exchange rate, Microsoft's segment performance appeared to be flat compared with the previous forecast. If the currency effect is adjusted, then the performance of Microsoft's Intelligent Cloud, Productivity and Business Processes segments will be higher than the previous performance guidance.