Microsoft to report first quarter 2022 results as chip crunch continues to hit PC and gaming industries

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Microsoft CEO Satya Narayana Nadella speaks at a Microsoft Live Event in the Manhattan neighborhood of New York City on October 26, 2016. REUTERS / Lucas Jackson

Microsoft (MSFT) will release its first quarter 2022 results on Tuesday after the closing bell, and while the chip shortage could hurt the company’s personal computing business, investors may be more interested in its performance. large cloud segment.

Here’s what Wall Street analysts expect from Microsoft for the quarter, as compiled by Bloomberg, compared to how it performed in the same quarter last year.

  • Returned: 43.93 billion dollars expected against 37.15 billion in the first quarter of 2021

  • Earnings per share: $ 2.07 expected vs. $ 1.82 in Q1 2021

  • Smart cloud: $ 16.58 billion expected against $ 12.98 billion in the first quarter of 2021

  • Productivity and business processes: $ 14.70 billion expected against $ 12.31 billion in the first quarter of 2021

  • More personal computing: $ 12.68 billion expected against $ 11.84 billion in the first quarter of 2021

Microsoft’s cloud business is the largest segment of the business, helping to push the tech giant’s market capitalization to over $ 2 trillion, and it continues to grow.

“We believe Azure’s cloud momentum is still in its infancy within the company’s massive installed base, and the transition from Office 365 for consumers and businesses will provide favorable winds for the growth over the next several years, ”wrote Wedbush analyst Dan Ives in a note before Microsoft’s earnings.

Strong performance in Microsoft’s cloud business will likely offset any news of a slowdown in the company’s more personal computing segment. While Microsoft recently started rolling out its latest version of Windows, called Windows 11, the global chip shortage, which is expected to last until at least 2022, is limiting sales of new PCs.

While business demand for desktops is strong, the chip crisis is limiting the availability of laptops, according to research firm Gartner. Adding to the problem is the fact that the availability of COVID-19 vaccines is forcing consumers to spend on other products outside of PCs, according to Gartner Research Director Mikako Kitagawa. In other words, as people move back into the world, they are more interested in expenses other than computers, like dining out.

“Global PC shipments totaled 84.1 million units in the third quarter of 2021, an increase of 1% from the third quarter of 2020, according to preliminary results from Gartner, Inc.,” Kitagawa said in a statement. Press. “As COVID-19 vaccines become more widely available, consumer and education spending has started to shift away from PCs to other priorities, slowing market dynamics. “

Microsoft’s gaming segment has also been hit by the chip shortage. Demand for the company’s Xbox Series X and Series S consoles has significantly outstripped supply, leaving consumers looking for systems in the aftermarket, where they go for hundreds above their asking prices of $ 499. and $ 299, respectively.

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