Microsoft claims that China and Russia reduced its revenue.

Microsoft claims that China and Russia reduced its revenue.

 The happenings in another country are hurting Microsoft's company.

The IT giant blamed China's and Russia's events, such as the former's prolonged Covid lockdowns and the latter's conflict against Ukraine, for lower-than-expected earnings on Tuesday.

  Microsoft (MSFT) reported $51.9 billion in revenue and $16.7 billion in profit, up 12 and 2 percent from the same period last year, respectively, but less than analysts' expectations surveyed by Refinitiv.

 

 

 

The company noted in its earnings release that "extended production shutdowns in China" cost it $300 million. It also stated that it spent $126 million "substantially scaling down" its operations in Russia as a result of the conflict in Ukraine.

 But there were also more general problems. Along with Microsoft's search and news businesses, LinkedIn's employment platform also suffered from a decrease in advertising spending, which caused a revenue fall of over $100 million.

Microsoft claimed it attempted "a strategic realignment" of its operations amid a general decline in the computer sector, spending $113 million on employee severance (excluding Russia).

In after-hours trading, Microsoft stock fell by almost 1%.
However, there were some positive aspects, most notably Microsoft's cloud business. In comparison to the same quarter last year, the company's cloud revenue for the quarter increased by 28% to $25 billion.

Amy Hood, executive vice president and chief financial officer of Microsoft, said in a statement that "in a dynamic market we saw high demand, took share, and improved customer commitment to our cloud platform."

The cloud increase, according to Haris Anwar, a senior analyst at Investing.com, shows Microsoft's perseverance.

He stated in a statement that the results "very much reflect the impact of a hard economic environment which is hitting practically every giant tech organization." A trend that will assist Microsoft even if the economy enters a recession, he continued, is the excellent cloud performance, which shows that "big and small enterprises continue to spend on their IT infrastructure."