Microsoft's Expectation-Busting Update

Microsoft's Expectation-Busting Update

over 3 years ago1 min

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Microsoft was the hero investors needed late on Wednesday: the cloud-based crusader swooped in to save the day with an expectation-busting quarterly update 🦸‍♀️

What does this mean?

Microsoft – the second-most valuable public company in the US – reported quarterly revenue and profit that eclipsed investors’ predictions. The tech giant had been in a good position to do just that, with analysts’ earnings estimates having fallen since the pandemic began. That might seem odd on the face of it: investors might’ve expected a boost in demand for cloud computing services and Office 365 from workers who found themselves stuck at home 🏠 And they weren’t entirely wrong: Microsoft’s cloud segment did grow revenue by more than expected, but its productivity business fell slightly short.

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Why should I care?

America’s tech-focused Nasdaq Composite index rose 31% last quarter, even as analysts cautioned its tech company-driven rise was going too far, too fast 📈 Those firms, after all, have been forecast to report roughly 10% lower profits on average than the same time last year. And after Netflix’s weaker-than-expected update last week sent its shares lower, some investors were worried it was the beginning of the end for tech. Just as well, then, that Microsoft – six times the size of Netflix – proved them wrong, in turn vindicating the climb tech stocks saw earlier this week.

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The sun might’ve shone on Microsoft’s cloud businesses last quarter, but LinkedIn – bought by the tech giant in 2016 – didn’t do so well 🌦 The professional networking platform saw a slowdown in both its advertising revenue growth and its recruitment-related purchases from small- and medium-sized businesses, leading to an announcement this week that it planned to cut almost 1,000 – or 6% – of its global staff.

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