Microsoft’s profit declined more than 12% in the holiday season, and executives said Tuesday that a revenue deceleration in December is expected to continue into the new year as the company lays off workers.
Microsoft Corp.’s profit declined more than 12% in the holiday season, and executives said Tuesday that a revenue deceleration at the end of 2022 is expected to continue into the new year as the company lays off workers.
Microsoft reported fiscal second-quarter earnings of $16.43 billion, or $2.20 a share, a decline from $2.48 a share a year ago. The company also reported that severance, impairment and lease-consolidation charges cost it 12 cents a share, which would lead to adjusted earnings of $2.32 a share; Microsoft executives did not provide adjusted earnings a year ago, and typically stick to GAAP profit readings.
Microsoft’s forecast takes on extra importance this quarter, as Microsoft executives told investors at the end of the last fiscal year that they expect double-digit percentage growth in revenue and operating margins, but a lot has happened since then. Microsoft announced thousands of layoffs last week, part of a wave of job cuts from Big Tech companies that increased their workforces at a rapid pace in the early years of the COVID-19 pandemic.
Microsoft executives instead point to opportunities to grow despite the slowdown in business spending. The day before its earnings report, the company officially announced a long-expected third investment in ChatGPT creator OpenAI, which includes plans to incorporate the technology into services such as Microsoft’s Azure cloud-computing offering and Bing search engine.
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