Microsoft slashed its quarterly earnings and revenue forecast on Thursday, becoming the latest US company to warn of the impact of a stronger dollar and sending its shares lower.
“Software companies, including Microsoft, have significant operations outside the US and I think Microsoft is being prudent in anticipating (market) expectations and being transparent about currency impacts,” said Steve Koenig, managing director. from SMBC Nikko Securities.
Microsoft, which earns about half of its revenue outside the United States, lowered its revenue forecast for the three segments, which include Windows products, cloud services and personal computing.
Corporate hedging activity has increased as more companies try to hedge their profits against the impact of currency fluctuations amid rising inflation.
It is common for companies to hedge against unexpected currency market movements, but the urgency comes after years of quiet currency volatility, during which currency fluctuations had limited impact on earnings.
The tech giant expects revenue for the quarter to be between $51.94 billion and $52.74 billion, down from the previous range of $52.4 billion to $53.20 billion.
The company cut its earnings forecast to $2.24 to $2.32 a share from an earlier expectation of $2.28 to $2.35 a share. Analysts are forecasting earnings of $2.33 per share and revenue of $52.87 billion, according to Refinitiv.
At 1:42 pm (Brasília time), the company’s share was down 1%, after having dropped about 3%.
Source: CNN Brasil
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