Microsoft’s revenue rose 2% to $52.7 billion in its second fiscal quarter, just missing Wall Street’s expectations, as profits dropped 7% to $17.4 billion, not counting a special charge related to its layoffs — providing a glimpse of the growing economic uncertainty that the company cited in announcing the cutbacks last week.
The company reported strength in some of its products and services for businesses, led by a 22% increase in Microsoft Cloud revenue, to $27.1 billion.
However, the division that includes Microsoft Windows, Xbox and devices saw revenue decline 19% to $14.2 billion, including a 39% decline in its devices business, which includes Microsoft Surface tablets and computers.
Microsoft shares were up nearly 4% in extended trading following the report.
The earnings report follows the company’s announcement last week that it’s cutting 10,000 jobs, or about 5% of its workforce, part of a wave of layoffs across the tech industry that started last fall.
Microsoft is the first big tech company to report earnings for the quarter ended Dec. 31, and its results are being closely watched by investors as a broader indication of corporate tech spending. Companies including Amazon and Google, Microsoft’s main rivals in the cloud, will report their results next week.
In conjunction with the job cuts, Microsoft said in advance of the earnings report that it was taking a charge of $1.2 billion for the quarter, or 12 cents a share, to account for severance packages for laid-off employees, the cost of exiting real estate leases, and unspecified changes in its hardware portfolio.
Not including that charge, Microsoft’s earnings were $2.32 per share, down 6%. On that same basis, analysts expected the company to report earnings of $2.30 per share, on revenue around $53 billion.
Developing story, more to come.