Microsoft to Report Earnings After Market Close

Microsoft will announce their fiscal second-quarter results after regular trading hours on Tuesday.

Analysts are expecting the following:

Microsoft's sales growth is expected to be just 2.3% year over year, which would be the weakest expansion for the company in any period since 2016.

The company is facing concerns from all sides. Last week, when CEO Satya Nadella announced 10,000 job cuts, he noted that clients in every industry around the world have become more cautious due to recession concerns.

Microsoft shares have fallen 18% over the past year, slightly underperforming the Nasdaq.

Microsoft's Intelligent Cloud unit is powered by the Azure public cloud. In October, executives said the company's engineers were helping customers be more efficient with their Azure infrastructure services. Last week, Nadella wrote that "we're now seeing them optimize their digital spend to do more with less."

Analysts are expecting revenue growth for Azure and other cloud services to be close to 31%. In the previous quarter, the business grew by 35%.

Microsoft's Windows business is facing a slowdown in the PC market. Technology industry researcher Gartner estimated that during the fourth quarter of 2022, the PC business had its slowest growth since the company started tracking the market in the mid-1990s.

The third unit, Productivity and Business Processes, contains the Microsoft 365 productivity suite, which was formerly known as Office. Some analysts have said they expect slower growth in seats purchased by business customers.

The decision to reduce headcount indicates that Microsoft is committed to protecting its margins, even in the face of revenue challenges, according to analysts at Raymond James. In a note to clients on Monday, the analysts recommended buying Microsoft shares.

Microsoft has announced that it will be laying off a number of employees, which will result in a $1.2 billion charge. This will also have a negative impact on earnings of 12 cents per share. The company is also making changes to its hardware lineup and consolidating its leases, which will contribute to the overall charge.

Executives will discuss the company's fiscal second quarter results with analysts on a conference call starting at 2:30 p.m. ET.

Microsoft has a strong growth story in the long term, according to Oppenheimer analyst Andrew Horan. The company is well-positioned in several key areas, including cloud computing, artificial intelligence, and gaming. This gives it a lot of potential for continued growth in the years to come.