Microsoft highlights the gaming business with an optimistic outlook

Microsoft on Tuesday released an optimistic financial forecast for the first months of this year, as it forecasts continued strong demand for a wide range of digital services in the face of global supply constraints and the latest outbreak of Covid-19 infections.

Satya Nadela, CEO, highlighted the games as one of the markets most likely to benefit, with “intensity of use and diversity of business models” increasing the attractiveness of the business. His comments came a week after Microsoft unveiled an agreement to pay $ 75 billion to game publisher Activision Blizzard by sending shockwaves to the video game market.

The firm’s confident forecast follows the recent collapse in technology stocks, as Wall Street worries about the effect of rising interest rates and the end of the pandemic-led jump in demand for many technology services.

Microsoft’s share price initially fell 5% in after-hours trading after posting results for its last quarter, although it exceeded analysts’ expectations. He later reversed the course to trade 1.2% higher after the company gave a strong forecast for the current quarter of talks with analysts.

The results for the three months since the end of December showed a solid performance, “but not the usual rhythm we’ve seen,” which has sold off the knee, said Brent Thill, an analyst at Jefferies. The response reflected broader concerns about high-tech stock prices and “fears of future delays that weigh on many software stories,” he added.

Despite these fears, Microsoft forecasts revenue growth of 16-18% in the current quarter, although the comparison with the previous year, when there was a strong rebound in sales, was a more challenging contrast. The forecast followed a 20% jump in revenue in the last months of last year to $ 51.7 billion, or about $ 800 million more than Wall Street expected.

Amy Hood, chief financial officer, cited Microsoft’s cloud services as the reason for the latest superiority, with cloud revenue jumping 32 percent to $ 22.1 billion. New bookings in the cloud business were also stronger than expected, rising 37 percent.

The company’s gaming revenue grew 8 percent in the last quarter, while sales of the Xbox console grew 4 percent. This compares to the previous year, when revenue jumped by half as demand for games rose during the depths of the pandemic.

Earnings per share in the last months of last year rose 22% to $ 2.48, 17 cents ahead of expectations as the company’s operating profit margin rose 1 percentage point. Hood said the strong performance gave Microsoft the confidence to anticipate further improvements in profit margins.

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