Strong dollar impacts technology company, which has 50% of its sales outside the United States
Microsoft announced on Thursday (June 2, 2022) a cut in its revenue and profit forecast for the 4th fiscal quarter of this year. The tech giant justified the downward revision of results with the rise in the dollar, which makes it less competitive outside the United States. Here’s the intact of the revised forecasts for the months of April, May and June (192 KB).
The cut in earnings expectations impacted the company’s 3 segments: Windows products, cloud services and personal computing.
Now, the company’s expected sales for the period are between US$ 51.94 billion and US$ 52.74 billion, below the previous forecast, which was US$ 52.4 billion to US$ 53.2 billion.
Estimated earnings are between $2.24 per share and $2.32 per share, compared with a previous projection of between $2.28 per share and $2.35 per share.
O DXY (Dollar Index), which compares the US currency with other strong currencies such as the euro, pound and yen, is up more than 6% this year. In May, it hit the highest level since 2002. The dollar’s rise knocked the other currencies in the pack.
Microsoft earns about half of its revenue outside the US, which means that the global economic crisis and US inflation – which ended March at the highest level in 40 years – impact its results.
Other companies such as Coca-Cola and Procter & Gamble also had to moderate their projections.
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