Microsoft Got Battered By Strong Dollar, China Shutdowns In Q4, Says CFO

Microsoft Corporation MSFT Chief Financial Officer Amy Hood said the tech giant was hammered in its last quarter by a strong dollar and production shutdowns in China linked to COVID-19 restrictions.

What Happened: Hood said that the dollar strengthened throughout the quarter and created “an additional headwind.”

“As a result, for the full quarter, revenue and [earnings per share] were negatively impacted by $595 million and $0.04 per share, beyond our expectations shared in April.”

Hood pointed at the production shutdowns in China that continued through May and a deteriorating PC market in June that led to a negative Windows original equipment manufacturer revenue impact in excess of $300 million.

Other setbacks included reductions in advertising spending, which affected LinkedIn Marketing Solutions and search and news advertising revenue of more than $100 million. 

See Also: How To Buy Microsoft (MSFT) Shares

Why It Matters: Microsoft reported Q4 revenue of $51.9 billion on Tuesday, which rose 12% year-over-year. The revenue figure missed a Street estimate of $52.47 billion. EPS came in at $2.23 in the quarter, missing an estimated $2.30.

Apart from China production shutdowns, the company also scaled down its operations in Russia during the quarter, resulting in a $126 million bad debt expense, according to a prior report.

More earnings figures are expected from tech giants this week. Amazon.com, Inc AMZN, which competes with Microsoft’s cloud division, is expected to release earnings on Thursday. On the same day, Apple Inc AAPL will also publish its quarterly numbers.

Price Action: On Tuesday, Microsoft shares rose 4% to $261.90 in the regular session after closing 2.7% lower at $251.90 in the regular trading, according to data from Benzinga Pro.

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