Thursday , January 21 2021

Microsoft’s earnings exceeded expectations with the help of video game sales

The company reported $ 37.2 billion in revenue for the three months to September, well above Wall Street analysts’ forecast of $ 35.8 billion.
Income in Microsoft (MSFT) The intelligent cloud segment reached $ 13 billion, up 20% from the previous year, including a 48% year-on-year increase in Azur revenue. PC revenue rose 6% to $ 11.85 billion, thanks to increased sales of Xbox and Microsoft Surface devices.

Earnings for the quarter were US $ 1.82 per share, exceeding the forecast of US $ 1.55 per share.

“The next decade of economic performance for any business will be defined by the speed of their digital transformation,” Nadella told a call with analysts on Tuesday.

Analysts say the company’s business growth is still in its infancy.

“This change in the cloud and the dynamics of the WFH looks here to stay, and the company will be the biggest user of this trend,” Wedbush analyst Dan Ives said in a note to investors on Tuesday.

Investors may have concerns about Azur’s growth rate, however, despite strong earnings. Shares of Microsoft fell nearly 2% after trading on Tuesday night. Azur’s revenue growth rate during the quarter of 48% decreased from 59% in the same period last year.

Some analysts, however, argue that this slowdown should be expected given the large size of the business. Nadela said on Tuesday that she expects technology costs to double in the next 10 years.

Gaming is also a great opportunity for Microsoft to grow.

“Gambling is one of the largest and fastest growing forms of entertainment in the world. We expect to have more than $ 200 billion in revenue in this industry by 2021,” Kyle Wickstrom, Microsoft’s director of investor relations, told CNN. Ann Business.

Microsoft is on the verge of announcing the next generation of the next generation video game console, the Xbox Series X and the more budget Xbox Series S next week. How consoles sell can affect a tech company’s PC in the last quarter. Both consoles will compete against the Sony PlayStation 5 and a disc-less, cheaper version of that device.

“We’re seeing a really great early response to the console that will be launched next quarter,” Wickstrom said.

During the last quarter, Microsoft also announced that it had acquired ZeniMax, the parent company of video game publisher Bethesda. The acquisition gives Microsoft ownership of popular video games, including the Fallout series, Elder Scrolls V: Skyrim and the Doom franchise. These games could help Microsoft make its way into console wars.

Correction: Kyle Wickstrom, Microsoft’s director of investor relations, said the company expects more than $ 200 billion in gaming revenue in 2021. The previous version of this story says it is expected in 2020.

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