Microsoft expected to post record sales amid strong game, cloud demand2 min read . Updated: 27 Jul 2021, 05:39 PM IST
- Wall Street analysts predict quarterly revenue will grow 16% from a year earlier
Microsoft Corp. is expected to post another quarter of record sales in a sign that its success winning new cloud-computing and videogame customers during the pandemic isn’t fading as constraints on daily routines gradually ease.
The software giant has been among the companies to enjoy the biggest boost from the working-from-home and remote-schooling period. Companies embraced digital services that run on the cloud and have been a centerpiece of Microsoft’s growth. Personal computers have been flying off the shelf, many using the company’s Windows software, and its videogame products have been in hot demand. Its Teams workplace collaboration software reached 145 million daily active users in the March quarter, up from about 20 million before the pandemic.
Microsoft’s valuation now tops $2 trillion, second only to Apple Inc., whose rivalry with Microsoft has been rekindled in recent months. Microsoft’s stock is up more than 40% over the past year.
Wall Street expects the Redmond, Wash.-based company to post financial fourth-quarter sales of $44.1 billion after the bell Tuesday, up around 16% from the previous year, according to analysts surveyed by FactSet. Microsoft likely will generate a roughly $14.6 billion profit for the period ended June 30, the analysts on average say, more than $3 billion above the year-earlier figure.
Microsoft’s videogame business has been particularly supercharged, buoyed by the release of new game consoles and streaming-game services. The company in March closed its $7.5 billion acquisition of ZeniMax Media Inc., the owner of the popular Doom game franchise.
Azure, Microsoft’s collection of cloud data centers and software tools that have been the backbone of its growth in recent years, is expected to have a strong quarter of rising sales. The rate of increase is expected to fall short of the lofty levels recorded earlier during the pandemic. Analysts expect Azure year-over-year sales growth of roughly 42%.
As the U.S. economy has started to ease some of its pandemic-era restrictions and offices have started to reopen, Microsoft has spelled out plans to try to carry its success into a period where hybrid work will be more common. In February, the company launched a set of apps with an eye on a work environment in which some employees are remote and others in the office. This month, it introduced a cloud-based version of its Windows operating system, accessible on any device running any operating system that has a web browser, in part so people can shift easily between their office PCs and home digital devices.
The core Windows franchise also is getting a refresh. Microsoft late last month launched Windows 11, the first new version in nearly six years. It features an app-store collaboration with Amazon.com Inc. to allow more apps to be installed on PCs. Revenue from Windows 11 won’t be booked until later, though, when it becomes available to the wider public.
The software giant also has contended with numerous cybersecurity issues, such as ransomware attacks on digital infrastructure. Last month, Microsoft disclosed that hackers hit some of its systems in an attack that U.S. government officials have said was linked to Russia’s Foreign Intelligence Service. Microsoft has been bulking up on cybersecurity tools. On July 12, the company said it had agreed to buy cybersecurity provider RiskIQ Inc. Last week, it said it added CloudKnox Security, a provider of tools to manage cloud access.
This story has been published from a wire agency feed without modifications to the text
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