Microsoft’s Results Top Analysts’ Expectations For A 10th Consecutive Quarter

Microsoft (NASDAQ:MSFT) reported quarterly earnings that beat analysts’ estimates for a 10th consecutive quarter.

The Seattle-based company’s sales in its fiscal fourth quarter ended June 30 climbed 21% to $46.2 billion U.S. That compared with a $44.3-billion U.S. average estimate of analysts. Microsoft’s net income rose to $16.5 billion U.S., or $2.17 U.S. a share, while analysts had expected $1.92 U.S.

However, excitement about Microsoft’s latest results was tempered by concern about slowing growth in the software giant’s Azure cloud-computing business.

Azure sales increased 51% in the period and some investors hoped for a faster rate of growth. While Azure has been growing steadily, it faces stiff competition for big deals from Amazon, the dominant cloud service provider.

Microsoft shares dropped 2.5% in extended trading following the company’s earnings results. The company’s stock rose 15% in the fiscal fourth quarter compared with 8.2% for the S&P 500 Index, reflecting investor optimism about growth prospects for Azure, Office, artificial intelligence, and gaming.

Commercial cloud sales in the fiscal third quarter rose 36% to $19.5 billion U.S., Microsoft said. In the Productivity unit, mostly made up of Office software, sales totaled $14.7 billion U.S., compared with an average analysts’ estimate of $14 billion U.S.

In the Personal Computing (PC) unit, which includes products such as Windows, Surface and Xbox, sales were $14.1 billion U.S. Analysts had expected $13.9 billion U.S.

Overall gaming revenue rose 11% in the quarter, Microsoft said, with Xbox hardware sales more than doubling. A global semiconductor shortage has constrained sales of Xbox consoles following the release of a new machine last Christmas, and growth in video game and gaming services fell 4% in the quarter compared with the pandemic-boosted year earlier period.