Microsoft Poised for Record Revenue Boosted by Cloud, Videogaming
26 Januar 2021 - 2:29PM
Dow Jones News
By Aaron Tilley
Microsoft Corp. is poised to post record quarterly sales
underpinned by pandemic-fueled demand for videogaming and
accelerated adoption of its cloud-computing services.
The software giant's fiscal second-quarter earnings due Tuesday
afternoon will reflect a period when demand for the latest versions
of its Xbox videogame consoles has outstripped supply. Wall Street
expects Microsoft to post $40.2 billion in sales, the highest for
any three-month period and up around 9% from the prior-year
quarter. Net income is expected to jump by $1 billion to $12.6
billion, according to FactSet.
The remote work era has been a boon for Microsoft. In addition
to its videogaming and cloud-computing products, the company has
seen strong sales for its Surface laptops as people bought devices
to work remotely and enable distance learning. And use of
Microsoft's Teams workplace collaboration software that includes
text chat and videoconferencing, and has been a priority for Chief
Executive Satya Nadella, has jumped during the pandemic. Microsoft
shares have risen more than 37% over the past year.
Mr. Nadella's bet on cloud computing has been pivotal to
Microsoft's multiyear run of year-over-year sales increases. Sales
for the company's Azure cloud-services have expanded rapidly
however, before the pandemic hit, the pace of growth was slowing as
the business gained scale. The remote work era arrested that
decline. Azure sales increased 48% in the September quarter, up
from 47% expansion in the prior three-month period.
Azure became a bigger source of revenue for Microsoft than its
Windows operating system licenses in the September quarter, said
Brent Bracelin, an analyst at Piper Sandler. Microsoft doesn't
break out Azure revenue, but the company is the world's
second-largest cloud-computing vendor after Amazon.com Inc.
The role of videogaming in Microsoft's fortunes also has
increased under Mr. Nadella, in part fueled by acquisitions. The
company last year bought ZeniMax Media Inc., the parent company of
the popular Doom videogame franchise, for $7.5 billion. Gaming
revenue grew 30% in the first quarter of this financial year and is
expected to enjoy another bump in the most recent three-month
period, aided by the November release of two new gaming consoles,
Xbox Series X and S, to battle Sony Corp.'s PlayStation 5.
For Microsoft, the consoles, a relatively low margin business,
are less important to its bottom line than hooking gamers on
subscription services for its games. But the company last week
misstepped when it tried to push through a price hike for some of
those services. Customers revolted, and the software giant reversed
course hours later.
The business software market, core to Microsoft, also is
becoming more heated. Business software vendor Salesforce.com Inc.
last month said it would spend around $27.7 billion to buy Slack
Technologies Inc., maker of a popular chat-based workplace
collaboration platform. With Slack, Salesforce is looking to more
aggressively go after a core business of Microsoft. The deal is
expected to close in the coming months.
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Write to Aaron Tilley at aaron.tilley@wsj.com
(END) Dow Jones Newswires
January 26, 2021 08:14 ET (13:14 GMT)
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