A slow Microsoft opens the ball for results in tech

Posted Jan 24, 2023, 11:22 PMUpdated on Jan 24, 2023 at 11:25 p.m.

That’s Microsoft’s slowest sales growth in at least six years, and it’s below market expectations. Between October and December, that is to say for its second quarter, the software giant recorded a 2% increase in its turnover, to 52.7 billion dollars.

In addition, quarterly net income fell 12% to $16.4 billion, again below expectations. The group announced its financial results on Tuesday after trading. “We are committed to helping our customers use our platform and tools to do more with less and innovate for the future in the new era of artificial intelligence,” CEO Satya Nadella said in a tweet.

A way to emphasize Microsoft’s investment in the OpenAI artificial intelligence start-up which publishes ChatGPT – rather than dwelling on growth that has remained stranded.

Do more with less

“Doing more with less” refers to his statements last week, in a memo intended to explain to employees why Microsoft is laying off 10,000 of them. One of the reasons given is the slowdown in demand. Consumers want to “optimize” their spending, which will squeeze Microsoft’s sales.

Consumers who had flocked to screens, games, online services during the Covid pandemic have re-prioritized since the economy reopened.

The tech giants who had seen their sales jump, and who consequently recruited tens of thousands of new collaborators, experienced a stock market cold shower last year when behaviors returned to “normal”, or almost near. The Nasdaq technology index fell by a third, against 20% for the Dow Jones.

The cold snap at Microsoft may be the harbinger of a cold financial season for the tech sector. Meta and Alphabet will present their annual results next week. All have experienced stock market setbacks and announced layoffs. Conversely, Netflix set out to conquer subscribers again during the fourth quarter. Even though times are tough, the Internet giants are resilient.

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