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Recently, the financial reports of major U.S. stock technology giants have been released one after another, of which the market's super giant Microsoft is undoubtedly the most concerned. As the world's most famous technology enterprise, Microsoft's performance has always affected everyone's heart. However, recently, Microsoft's financial performance has been surprising, and all kinds of major performance products have slowed down. Many people are asking the old giant Microsoft what's the matter?

1、 Is the growth rate of all businesses of Microsoft slowing down?

According to the report of China business news, Microsoft released the fourth quarter financial report of fiscal year 2022 as of June 30. The revenue of Microsoft in the fourth quarter was $51.87 billion, lower than the $52.45 billion expected by analysts, with a year-on-year increase of 12%, the lowest growth rate since September 2020; The net profit was US $16.74 billion, a year-on-year increase of 2%, and the growth rate was also the lowest in the past two years.

In fact, as early as June this year, Microsoft took the initiative to reduce its revenue and profit guidance for the fourth fiscal quarter due to the adverse impact of changes in the US dollar exchange rate.

"In the fourth quarter of fiscal 2022, the impact of changing macroeconomic conditions and other unforeseen circumstances on financial performance exceeded the impact contained in the forward-looking guidance we provided on April 26, 2022." Microsoft said in the financial report. At present, the impact of these changes on Microsoft is all-round.

According to the report of surging news, from the perspective of business, the revenue growth of Microsoft's three major businesses - cloud business, productivity and business process business and personal computer business slowed down compared with the previous quarter.

Microsoft's Intelligent Cloud business, including azure public cloud, GitHub, windows server and other server products, achieved a revenue of $20.91 billion, an increase of 20% year-on-year, lower than the $21.1 billion predicted by Wall Street. Among them, the revenue of azure and other cloud services increased by 40% year-on-year in this quarter, and the average growth rate expected by analysts was 43%, while the Department increased by 46% year-on-year in the previous quarter.

Satya NADELLA, CEO of Microsoft, said in a conference call with analysts that the number of azure contracts reached more than 10million this quarter, with a contract value of $1billion.

The revenue of productivity and business processes was $16.6 billion, an increase of 13% year-on-year, while the previous quarter increased by 17% year-on-year. Among them, the revenue of office commercial products and cloud services increased by 9%, office 365 commercial revenue increased by 15%, office consumer products and cloud services revenue increased by 9%, LinkedIn revenue increased by 26%, dynamics 365 revenue increased by 31%, and dynamics products and cloud services revenue increased by 19%. The growth rate was lower than that of the previous quarter.

According to DoNews, Microsoft smart cloud has become the largest business segment of Microsoft's revenue since Q3 of fiscal 2020. For a long time, Microsoft's cloud business has performed better than other business sectors in terms of growth rate and growth.

2、 What is the future of technology giants?

Facing the current slowdown of Microsoft's performance, many people are still very confused. After all, Microsoft is the leader among the technology giants, and it is also a model of the second spring of the old technology giants. Facing the current slowdown of Microsoft's performance, what should we think? How to judge the future of these technology giants?

First, the impact of the macroeconomic downturn began to hit most technology giants. At present, for the major technology enterprises, especially the five technology giants, the biggest pressure at present is undoubtedly the macroeconomic pressure brought about by the process of economic development. Because these technology giants' businesses are too large, they themselves have been deeply embedded in the core field of economic development. In this case, macroeconomic fluctuations will inevitably impact on the performance of these internet giants, This is why we see that the current major Internet giants are facing greater market pressure.

Specifically, with the increasing downward pressure on the current world economy, the inflation level of the world economy began to rise, consumers' confidence in consumption began to show a lack of situation, and consumers' wait-and-see mood began to increase. Due to concerns about the rising uncertainty in the future, consumers' caution in consumption began to appear gradually, which undoubtedly had a huge impact on the entire market.

The direct impact on Microsoft is the decline in the sales of the whole consumer computer products. According to the data of market research agency Gartner, the global PC shipments in the second quarter of 2022 totaled 72million units, a decrease of 12.6% over the second quarter of 2021. Among them, PC shipments in Europe, the Middle East and Africa fell 18% year-on-year in the second quarter. Affected by this, as the personal computer business unit that once brought the most cash income to Microsoft, including the licensing business of windows, fell by 2% in the fourth quarter.

Moreover, due to the decline of computer shipments, another major business of Microsoft, namely productivity business, has also been impacted. Because office products are also closely related to computer sales, it is not surprising that Microsoft's poor performance.

Secondly, Microsoft's innovative business has not formed enough support for it. In addition to Microsoft's traditional business, Microsoft's innovative business, namely cloud computing business and metauniverse business, has always attracted market attention. However, from the current performance, Microsoft's innovative business has not brought enough growth support to Microsoft.

Previously, we have repeatedly said that Microsoft's cloud computing business, as a model of re innovation and second entrepreneurship of established enterprises, once carried a series of hopes for Microsoft's transformation and upgrading. Indeed, as an established enterprise, Microsoft's cloud computing business helped Microsoft achieve a curve overtaking in a short time due to its accumulated advantages, and even surpassed Microsoft's powerful competitors Amazon and Google in some aspects, It has become the star business of Microsoft.

However, what we see is that Microsoft's cloud computing business did not meet analysts' expectations. On the one hand, this is because Microsoft's cloud computing business mainly serves b-end enterprise users. For 2B's business, the b-end users' business status is not good, which will naturally lead to their own business decline. On the other hand, due to the increasing development pressure of the market, Microsoft's cloud computing business is facing increasingly fierce market competition, and the competition of competitors is becoming increasingly fierce, which directly leads to the development pressure of Microsoft's cloud computing business.

Looking at Microsoft's meta universe business, although it is highly innovative, this innovation is only the basis of meta universe business. In fact, the real landing scenario is still relatively limited. Limited by the user's network speed, equipment and other hardware conditions, it is still unknown what level meta universe can develop to. At least for a long time, meta universe business cannot become the core support of Microsoft.

Third, what is the future of technology giants such as Microsoft? In fact, objectively speaking, Microsoft's current performance has been quite good. Compared with the losses of many technology giants, Microsoft has at least maintained a certain growth rate. Although this growth rate is lower than the market's expectations, it has been a very valuable achievement.

For the current Microsoft, what needs to be done is to increase revenue and reduce expenditure. For such a large enterprise, there are great difficulties. Its huge size makes it difficult for Microsoft to turn around flexibly. Just like everyone described IBM as an elephant dance before, Microsoft is actually the same problem. In this case, NADELLA is already a very powerful leader.

What Microsoft needs to do is, on the one hand, try to reduce its operating costs. Only by reducing costs can it improve the efficiency of the market, so that it can gain more advantages in the market competition. On the other hand, we need to find ways to further improve the sales of our products. The user experience of win11 products is still quite good. As long as Microsoft can further improve its market expansion ability and further boost the market performance, it is still possible.

From the perspective of long-term development, facing the depression of the overall market, seeking stability may be the most important thing Microsoft needs to do at present.