Microsoft blames missed profit targets on economic woes.

A tough computer sales season, blamed on supply chain disruptions and geopolitical unrest, is also putting pressure on Microsoft's computing business, which relies on licensing revenue from PC manufacturers who install its Windows operating system on their products.

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Micrsoft

Microsoft reported a fiscal fourth-quarter profit of $16.7 billion, or $2.23 per share, falling short of analyst expectations of $2.29 per share — a rare disappointment for the tech behemoth, which has consistently outperformed Wall Street in recent years.

Its revenue in April-June was $51.9 billion, a 12% increase over the previous year. According to FactSet, analysts expected revenue of $52.94 billion.

The company attributed its poor financial performance to various “evolving macroeconomic conditions and other unforeseen items,” including production shutdowns in China, a deteriorating personal computer market, and the war in Ukraine, which forced Microsoft to scale back its operations in Russia.

The company had already reduced its profit and sales forecasts in early June due to “unfavorable” changes in the foreign exchange rate as the US dollar surged.

A difficult computer sales season, blamed on supply chain disruptions and geopolitical unrest, is also putting pressure on Microsoft’s computing business, which relies on licensing revenue from PC manufacturers who install its Windows operating system on their products.

Microsoft reported Tuesday that sales of those licenses were down 2% year on year. This, combined with a 6% drop in Xbox gaming-related content sales, dragged down Microsoft’s broader personal computing business segment, which grew just 2% to $14.4 billion for the quarter.

According to Gartner, global PC shipments fell 12.6 percent in the second calendar quarter of 2022 compared to the same period last year, the steepest drop in nine years. Another report from International Data Corporation estimates that PC shipments fell 15.3 percent between April 

Microsoft is currently aiming to complete a $68.7 billion acquisition of video game company Activision Blizzard, which could be the largest tech industry acquisition in history. The agreement, announced in June, the second consecutive quarter of declines following two years of growth. January is subject to approval by antitrust authorities in the United States and the United Kingdom.

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