Microsoft sees slowest sales growth in six years
Source link Microsoft Corp. posted its slowest sales growth in six years on Thursday, a sign of waning corporate demand as its rivals gain traction with corporations for cloud services.
The company reported that its fiscal fourth-quarter profit rose 14% year-on-year to $33.1 billion and its revenue increased just 5%, its weakest rate since the fourth quarter of 2013.
The slow growth was attributable to the slower-than-expected adoption of Microsoft’s Azure cloud services, which were unable to offset declines in the company’s traditional businesses, such as personal computer software and Xbox gaming consoles.
Microsoft has been pushing its cloud-computing products in an effort to diversify its revenue, but it is facing strong competition from other providers, such as Amazon Web Services and Google Cloud Platform.
Azure revenue grew 17%, but that was lower than the 22% growth in the prior quarter, a sign that Microsoft is losing ground in the cloud-computing market.
In contrast, rival Amazon.com Inc. reported that sales for its AWS cloud business rose 45% in the second quarter and Alphabet Inc.’s Google said revenue from its Google Cloud business increased 53% in the third quarter.
Microsoft Chief Financial Officer Amy Hood said the company’s results reflected a less-than-expected demand for Azure. She noted that the company is still gaining from its pivot to cloud computing, but she believes the overall adoption still has room to grow.
To maintain its competitive position, Microsoft is investing heavily in cloud-computing technologies and research and development. It has also been repurchasing its own shares and raising its dividend to reward shareholders.
It remains to be seen if Microsoft’s efforts will pay off, but for now the company is in a period of transition and its performance is not up to its usual standards.