Cloud division saves Microsoft from weak Xbox and Windows performance

Shawn Knight

Posts: 14,564   +174
Staff member
Bottom line: Microsoft reported positive year-over-year revenue growth of $52.7 billion for the three-month period ending December 31, 2022, thanks in large part to strong performance from its cloud computing services.

The $52.7 billion haul represented a modest two percent gain compared to the same period a year earlier. Net income, however, slid 12 percent year over year to $17.37 billion and diluted earnings per share checked in at $2.32 (down 11 percent compared to Q4 2021).

Microsoft's productivity and business processes division (Office, LinkedIn, Dynamics) generated $17 billion in revenue, up seven percent YoY, while its intelligent cloud division soared 18 percent to $21.5 billion, both of which helped to offset losses in other areas.

Windows OEM revenue decreased 39 percent, mirroring the performance of Microsoft's devices category. Xbox content and services revenue also took a hit, down 12 percent compared to the 2021 holiday season.

Microsoft recently extended its partnership with OpenAI, building on a partnership that was first forged in 2016 and reaffirmed in both 2019 and 2021. Microsoft described the new deal as a multiyear, multibillion dollar investment that will accelerate AI breakthroughs. According to Bloomberg, Redmond is committing an additional $10 billion.

Last week, the Washington-based tech giant announced it would be reducing its overall labor pool by 10,000 jobs. With the cuts, Microsoft joins a host of other big tech companies that are scaling back their workforces after hiring heavily during the pandemic.

Related: These are the severance packages tech giants like Google, Meta and Amazon are offering to fired employees

Looking ahead, Microsoft expects FY23 Q3 revenues of between $50.5 billion and $51.5 billion. The biggest takeaway here is that Microsoft expects revenue from its "More Personal Computing" division (Windows OEM, Xbox, devices and search) to fall to between $11.9 billion to $12.3 billion, from $14.2 billion in the most recent quarter.

In related news, Xbox and Bethesda are currently streaming their Developer Direct showcase which promises an inside look at some of the biggest games coming to Xbox, PC and Game Pass.

Image credit: Valent Lau, Tadas Sar

Permalink to story.

 

bviktor

Posts: 1,146   +1,681
Weak Xbox performance? But but I thought MS, the distant 3rd in the console race for the past 10 years, must be stopped from purchasing Activision because market dominance or something!
 

Julnor

Posts: 59   +69
I guess instead of buying Activision they should have made the same shady backroom exclusivity deals Sony has been doing for 25+ years.

What MS really should be punished for is buying out Vulkan devs to continue to force Windows adoption at the consumer level---not only should those buyouts have been blocked on anti-trust grounds, MS should have been forced to give Linux or another option the source code for DirectX and any other Windows gaming proprietary elements, that is literally what the law is and it was literally designed because monopolies destroy capitalism and the American public policy way of life. But old Boomer judges either don't understand or regulatory bodies are corrupt and paid off, so it has been a long time since any of them did their jobs. FB/Meta also was supposed to have been blocked from buying out new social media companies, and in the EU they get fined and forced into various concessions, but the US fails at it.

Perhaps if Valve's Steam Deck gets bigger they'll be the ones to challenge MS, and ideally MS gets broken up, like previous companies had to be.
 

Lounds

Posts: 1,276   +1,233
Who knew running Xbox with game pass could create a loss... I mean here's a brand new game we spent hundreds of millions of dollars on, free with your $10 sub. Honestly these people will drive the video games industry into the ground with game pass.
 

dangh

Posts: 838   +1,430
Who knew running Xbox with game pass could create a loss... I mean here's a brand new game we spent hundreds of millions of dollars on, free with your $10 sub. Honestly these people will drive the video games industry into the ground with game pass.
They making it at a loss to undercut competition and train sheeps into buying subscriptions
Already sheeps can't understand what's going on and want give them large publisher to ensure monopoly is even stronger.
 

dangh

Posts: 838   +1,430
Weak Xbox performance? But but I thought MS, the distant 3rd in the console race for the past 10 years, must be stopped from purchasing Activision because market dominance or something!
Wow. Are you trying to say that a company with triple as many gaming studios as Sony can't make good games or can't make better profit, so the solution is to give them one of largest publisher, so they have even more?
Maybe, you know, they could actually make games? Weird concept, I know, but forza, halo and gears is kinda very little for last 10 years and 20 studios plus bethesda...

And they undercutting the income by aggressive promotion of game pass to undercut the competition. Really, lower performance is simply result of their attempt to be monopoly...
And lower performance is not a bad performance. They keep throwing money for long term investment... But they do not make games anymore. Like valve, they understood real money is in services, so making games is secondary.

But sure, let's help poir top world company to achieve dominance, because they clearly can't manage money... Lol;)