Microsoft Corp’s (MSFT.O) lackluster quarterly outlook points to more gloom ahead for the tech sector, analysts said, after the tech bellwether warned its customers were cautious about spending in a turbulent economy. Microsoft, the second most valuable U.S. company, sounded a cautious note in its quarterly earnings report as a steep fall in client spending has sparked a series of high-profile layoffs in the tech industry.
Microsoft Corporation reported on Tuesday that its diluted earnings per share were 11% lower year over year, landing at $2.20 in the second quarter of fiscal 2023. Net income stood at $16.4 billion, 12% down from the second trimester of 2022 while operating income declined 8% to $20.4 billion.
The company’s Chief Executive Officer, Satya Nadella, and other Microsoft executives used the words “caution” and “cautious” at least six times on the one hour call on Tuesday. Analysts said the sharp slowdown in Microsoft’s revenue growth was a “warning sign” for the tech sector, with more weakness at its PC division than the cloud business.
“What we learned is that no one is immune to macro… what is telling is the quarter was largely fine, but we started to see softness in December and the outlook for this quarter was worse than expected,” said Rishi Jaluria, analyst at RBC. Companies from Amazon.com Inc (AMZN.O) to Facebook-parent Meta Platforms (META.O) are already preparing for tougher months ahead by slashing tens of thousands of jobs to keep their cash reserves high. Microsoft’s shares were down about 3% in pre-market trading on Wednesday. Shares of cloud companies including Alphabet Inc’s Google (GOOGL.O), Amazon.com, Salesforce (CRM.N), Cisco (CSCO.O) and Workday Inc (WDAY.O) all declined. NN: What part of a depression is coming is so hard to understand. If the biggest and the best and the brightest are battening down the hatches this must be seeing storm clouds…..