What’s Going On Here?Microsoft reported better-than-expected quarterly earnings late on Tuesday, so just imagine what other achievements the tech giant will unlock when it brings out its inner gamer. What Does This Mean?Microsoft has now beaten analysts’ earnings expectations for the last 12 quarters straight, and all three of its main business segments – which each make up about a third of total revenue – played their part this time around (tweet this). Revenue from the company’s cloud computing business and “productivity” segment – which includes Office 365 and LinkedIn – came in 26% and 19% higher than the same time in 2020 respectively, while sales in its personal computing business were up 15%. But a tech stock is still a tech stock: investors buy in based on the sheer potential of its future profits, which will only become less valuable as central banks raise interest rates this year. And that might be why, strong as these results were, investors initially sent its stock down 5%. Why Should I Care?Zooming in: Microsoft versus Meta.
Microsoft’s gaming segment only accounted for a small proportion of its revenue last quarter, but that might change after the company announced last week that it’s buying games developer Activision Blizzard. The acquisition will make Microsoft the third-biggest gaming company in the world, as it aims to build a metaverse fit to compete with Meta (née Facebook). Analysts, then, suspect its next move might be to buy companies in the VR space. But it might want to act fast: Meta added another two VR game developers – Supernatural and BigBox VR – to its roster last year.
The bigger picture: Retail gets an update.
Microsoft also announced this week that it’d be rolling out a cloud-based shipping service in partnership with FedEx – one that’ll integrate into retailers’ existing ecommerce platforms and use AI to offer customers speedier shipping and real-time delivery updates. It could be a smart collaboration: FedEx puts 86% of its growth down to ecommerce logistics alone. | 