Microsoft’s Overall Business Slows Down But Cloud Business Thrives

Microsoft’s business has noticeably lost momentum. Sales have recently increased, but at the lowest level in five years. And the prospects are not exactly rosy – also because of the energy crisis.

For the last fiscal quarter, the Redmond company reported sales of $50.1 billion. That’s more than the analysts originally expected, who were expecting just $49.6 billion. Year-on-year, revenue rose 11 percent. For a long time, Microsoft had achieved significantly higher values ​​here – mainly due to the massive increase in the cloud business. However, its growth, of all things, has weakened noticeably – after doubling in some cases from year to year, there is now only an increase of around 20 percent.

The bottom line is Microsoft left a profit of $17.6 billion. That is at least 14 percent less than last year. There are various reasons for the decline. In particular, costs are rising in the cloud sector, which is growing more slowly, because the massive rise in energy prices is clearly having an impact on the data centers as large consumers. But the declining sales figures in the PC segment also ensure that Microsoft shows weaknesses, especially in license sales, where good margins are achieved. Sales of Windows dropped by 15 percent.

Multiple problems

There are also various other difficulties that ultimately cannot be influenced by the management of the group. For example, the dollar is currently relatively strong again compared to other currencies, which makes foreign business more difficult – because customers there have to pay correspondingly more. And this is despite the fact that they are already struggling with economic problems, which is particularly evident in the badly hit Great Britain.

However, CEO Satya Nadella remains confident that ultimately the best can be made of the situation. “In a world grappling with mounting headwinds, digital technology is the ultimate tailwind,” he said. However, this will not lead to new highs in the short term. Expectations of business development for the current quarter are somewhat subdued, both among management and external experts.