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Microsoft, Alphabet Top Forecasts With Cloud, AI In Focus
Both Microsoft and Alphabet remain going concerns, according to the first of this season's quarterly results from America's mega-cap tech titans.
After slowing to a crawl, revenue grew 7% YoY at Microsoft in fiscal Q3 to $52.86 billion. Consensus expected $51 billion.
That'll come as a relief. Top-line growth was just 2% the prior quarter, the most tepid pace in years. On a constant currency basis, revenue rose 10% over the same period a year ago.
Sales topped estimates across the company's
Other than weak topline growth, these two reports didn’t have a lot of nits to pick, in my opinion. Revenue growth either improved a little or didn’t get worse (other than business lines that investors don’t care that much about, like Windows OEM), especially ex-FX. Margins held up. The expense benefits from their RIFs are starting to become clearer. Cash flow was ample. I don’t see estimates going down much, if at all, from these reports.
60 Billion dollars in share buybacks eh? NOW I see why they just HAD to cut headcount. There just was NOT enough money for those employees. They are literally just scraping by these days and the people who build the systems that Alphabet is now profiting off of were just too expensive to keep around.
The hangover on our society from the Covid epidemic potentially bodes trouble for the US economy.
The NY Times has a story this morning that’s rattling my cage about corporate real estate and the debt structure supporting it being at risk due to diminishing occupancy. Office buildings in Manhattan are largely empty. But at the same time, rising interest rates are squeezing the banks that lend money to the owners of these properties and holders of their paper.
My wife rode the train to downtown Chicago today, as she does one day every week, paying her respects to office conventional behavior. I work at home exclusively. So I don’t go to Chicago at all for work. My employer is an international that has an office in the area, but not downtown.
I go to city events and visit socially. That’s it. I hear noise that suggests some office buildings may be selling space for residential use. But empty offices are a huge problem in Chicago as well. Likely that’s true in LA, Minneapolis, Houston, Dallas, Denver, Seattle, San Francisco, etal.
I would not want to hold paper on those properties. I would not want to be the bank either. If anything may be a factor that inspires another leg down in the economy, it’s easy for me to imagine fear about corporate and bank debt being a catalyst.
Just speaking common sense.