Microsoft offers strong forecast, lifting shares


Microsoft forecast Intelligent Cloud revenue of US$18.75bil to US$19bil (RM78.57bil to RM79.62bil) for its fiscal third quarter, driven by “strong growth” in its Azure platform.

NEW YORK: Microsoft Corp has forecast revenue for the current quarter broadly ahead of Wall Street targets, driven in part by its Intelligent Cloud unit.

The outlook soothed concerns about growth sparked by results for the December quarter, which initially dragged on Microsoft’s shares in after-hours trade. But the shares reversed course following the outlook, trading 3% above the closing price.

Investors were seeking assurances that the enterprise cloud business is still growing strongly and got it from Microsoft.

“So the quarter itself was, ho hum. Good, but not as great as we’ve seen past quarters,” said Brent Thill, an analyst at Jefferies.

“But then the guidance for the third quarter really turned the tape around and saved the Nasdaq, if you will.”

Thill said Microsoft’s guidance that Azure revenue would be up sequentially was strong assurance that cloud demand was solid.

Microsoft forecast Intelligent Cloud revenue of US$18.75bil to US$19bil (RM78.57bil to RM79.62bil) for its fiscal third quarter, driven by “strong growth” in its Azure platform.

That compared with a Wall Street consensus of US$18.15bil (RM76.06bil), according to Refinitiv data.

Thill said the strong momentum for cloud computing benefitting Microsoft will likely also be reflected in upcoming results for rivals Amazon.com Inc and Alphabet Inc’s Google.

Microsoft delivered strong outlooks in other areas, too.

The More Computing unit expects revenue of US$14.15bil to US$14.45bil (RM59.30bil to RM60.55bil) for the third quarter, ahead of the Wall Street target of US$13.88bil (RM58.16bil), and Productivity and Business Processes of US$15.6bil to US$15.85bil (RM65.37bilt o RM66.42bil) compared with the consensus target of US$15.72bil (RM65.87bil).

Full-year operating margins are forecast to be up slightly from the previous year.

Microsoft’s total second-quarter revenue beat expectations but Azure revenue growth of 46% was only in line with analyst expectations as compiled by Visible Alpha.

The Azure growth showed a steady drop from fiscal 2020 when growth was in the 60% range. — Reuters

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