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

Microsoft Corporation (NASDAQ: 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 (NASDAQ: AMZN), which competes with Microsoft’s cloud division, is expected to release earnings on Thursday. On the same day, Apple Inc (NASDAQ: 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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