Demand for Microsoft’s cloud-computing services and work software helped boost its quarterly profits by 21% as the pandemic continued to keep many office workers at least partly at home.
The Redmond, Washington company on Tuesday reported fiscal second-quarter profit of $18.8 billion. It posted revenue of $51.7 billion for the October-December period, up 20% from a year earlier.
In a call with investors, CEO Satya Nadella said the company is transitioning from a period of pandemic-fueled demand to one in which digital technology can help overcome economic constraints to “drive productivity while keeping costs down.”
“The other area we are seeing strength is gaming,” Nadella said. “That’s where we have doubled down in terms of our consumer category.”
Microsoft last week announced its plans to buy high-profile game publisher Activision Blizzard for $68.7 billion, an all-cash deal that could be the priciest tech acquisition in history if it withstands scrutiny by antitrust regulators. It could also catapult the Xbox-maker ahead of Nintendo to join Sony and Tencent as one of the three biggest video game companies.
But the financial results revealed Tuesday show that business-focused offerings such as Microsoft’s Azure cloud computing platform and its suite of software products are still driving the company’s growth.
Net income of $2.48 per share beat Wall Street expectations. Analysts surveyed by FactSet were expecting Microsoft to earn $2.32 per share on revenue of $50.71 billion for the fiscal quarter. It’s the first time the company hit over $50 billion in sales in a three-month period.
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Beating analysts’ forecasts wasn’t enough to stop Microsoft shares from first dropping, then rising about 2% in after-hours trading on a jittery day for investors. As markets have been swinging between steep losses and gains, expensive stocks in high-flying tech companies have led losses as investors worry about rising interest rates.
Sales from Microsoft’s cloud computing business segment — where its biggest competitor is Amazon — grew 26% to $18.3 billion in the quarter ending in December.
Microsoft’s productivity segment, which includes its Office suite of workplace products such as email, grew by 19% from the same period a year earlier, to $15.9 billion.
The productivity segment also includes revenue from Microsoft’s LinkedIn jobs networking service, which increased 37% from the same time a year earlier. Nadella said it’s getting more engagement because of the “great reshuffle across the labor market.”
The company late last year halted its localized version of LinkedIn in mainland China, citing tightening government restrictions affecting the only major Western social networking platform that had still operated in the country.
Microsoft’s personal computing business, which includes Windows software licenses, Xbox and the Surface line of devices, grew by 15% to $17.5 billion.
Holiday gadget sales typically make the October-December quarter an important one for Surface devices and Xbox games and consoles. The company said Xbox content and services revenue grew 10% over the same time a year earlier. Xbox hardware revenue grew more modestly at 4% — in part because numbers in late 2020 had been boosted by the release of Microsoft’s Xbox Series X system, the company’s first new console since 2013.
Microsoft expects that snapping up Activision, the owner of popular games such as Candy Crush, Call of Duty, Overwatch and World of Warcraft, will boost demand for its Xbox Game Pass subscription service while also advancing its broader ambitions for immersive virtual worlds.
“The next wave of the internet will be a more open world where people can build — a more metaverse world,” Nadella told investors Tuesday.

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By Aaron Klotz published 28 January 22
PC Gaming is one of the most profitable markets in the world
According to a report by the NPD Group, the PC gaming hardware and accessories market skyrocketed during 2021, in no small part due to the COVID-19 pandemic. This has allowed the industry to reach a stellar $5.74 billion dollars in value for the whole year.
Most of the revenue was generated by desktop computers, laptops, and PC microphones, increasing by 38%, 29%, and 25%, respectively, during 2021. Pure sales volume growth was driven by PC microphones, monitors, and laptops by up to 27%, 17, and 16%, respectively. 
Overall, this gives the industry a 25% gain in revenue in 2021 over 2020. While impressive, this was down from 2020’s uncharacteristic gain of 62% in revenue compared to 2019. The changes in the market make a lot of sense in light of the pandemic, along with requirements to work and play from home. More people now than ever before are using computers for entertainment, hanging out socially, and work.
PC gaming also saw significant gains in 2021, with digital PC content bumping up an additional 5% in revenue last year for a total of $7.9 billion. This was also assisted by increased average playtime of PC gamers, which was recorded at 7.7 hours per week, a 1-hour increase over 2020.
However, due to both 2020 and 2021’s rapid growth in the PC market space, NPD predicts 2022 will be the first year we’ll see a decline in sales and revenue (by around 4%). Of course, this won’t solve any shortages, but we’re at the beginning of a new road that we hope leads to normalized supply and demand.
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        <span class="article-published" itemprop="datePublished">          <time datetime="2022-01-29T02:00:00Z">January 28, 2022 21:00 ET</time>       </span>        <span class="article-source" itemprop="sourceOrganization" itemscope itemtype="http://schema.org/Organization">          | Source:          <span>                <a href="/en/search/organization/Bragar%2520Eagel%2520&amp;%2520Squire" itemprop="name">Bragar Eagel &amp; Squire</a>          </span>              <meta itemprop="logo" url="https://ml.globenewswire.com/Resource/Download/29481954-f2ff-4756-b5a9-d982a6497bd0?size=2" alt="Company Name Logo" />            <span id="pnr-global-follow-button"></span>                </span>      <span itemprop="author copyrightHolder" style="display: none;">Bragar Eagel &amp; Squire</span>                <br>                     New York, New York, UNITED STATES                <br>NEW YORK, Jan.  28, 2022  (GLOBE NEWSWIRE) -- Bragar Eagel &amp; Squire, P.C., a nationally recognized shareholder rights law firm, reminds investors that class actions have been commenced on behalf of stockholders of Exicure, Inc. (NASDAQ: XCUR), Chegg, Inc. (NYSE: CHGG), Desktop Metal, Inc. (NYSE: DM), and DocuSign, Inc. (NASDAQ: DOCU). Stockholders have until the deadlines below to petition the court to serve as lead plaintiff. Additional information about each case can be found at the link provided.<br /><br><strong>Exicure, Inc. (NASDAQ: XCUR)</strong><br>Class Period: March 11, 2021 – November 15, 2021<br>Lead Plaintiff Deadline: February 11, 2022<br>On November 15, 2021, after the market closed, Exicure filed a Form 12b-25 with the SEC stating that it could not timely file its quarterly report for the period ended September 30, 2021. It explained that the Company was investigating “a claim made by a former Company senior researcher regarding alleged improprieties that researcher claims to have committed with respect to the Company’s XCUR-FXN preclinical program for the treatment of Friedreich’s ataxia.”<br>On this news, the Company’s stock price fell $0.30, or 28%, to close at $1.07 per share on November 16, 2021, on unusually heavy trading volume.<br>The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that there had been certain improprieties in Exicure’s preclinical program for the treatment of Friedreich’s ataxia; (2) that, as a result, there was a material risk that data from the preclinical program would not support continued clinical development; and (3) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.<br>For more information on the Exicure class action go to: <a href="https://www.globenewswire.com/Tracker?data=REmljFI0KBJ6nv3b16puOP6-AieyRh9O4JL4cCYb__TKtp84ywx4Aifl23wZThkMbL9m1-CKtJsQD10pr9TUbLgX0Nvr2grYkaZiuB9f68Y=" rel="nofollow noopener" target="_blank" title="">https://bespc.com/cases/XCUR</a><br><strong>Chegg, Inc. (NYSE: CHGG)</strong><br>Class Period: May 5, 2020 – November 1, 2021<br>Lead Plaintiff Deadline: February 21, 2022<br>The complaint charges Chegg, its Chief Executive Officer and Chief Financial Officer, and others with violations of the Securities Exchange Act of 1934. According to the complaint, the defendants made materially false and misleading statements and failed to disclose known adverse facts about Chegg's business, operations, and prospects, including that: (i) Chegg’s increase in subscribers, growth, and revenue had been a temporary effect of the COVID-19 pandemic that resulted in remote education for the vast majority of United States students and once the pandemic-related restrictions eased and students returned to campuses nationwide, Chegg's extraordinary growth trends would end; (ii) Chegg’s subscriber and revenue growth were largely due to the facilitation of remote education cheating an unstable business proposition rather than the strength of its business model or the acumen of its senior executives and directors; and (iii) as a result, the Company's current business metrics and financial prospects were not as strong as it had led the market to believe during the Class Period.<br>Following these disclosures, the Company’s stock price fell $30.64 per share, or 48.82%, to close at $32.12 per share on November 2, 2021.<br>For more information on the Chegg class action go to: <a href="https://www.globenewswire.com/Tracker?data=REmljFI0KBJ6nv3b16puOP6-AieyRh9O4JL4cCYb__QziZ7gA78PJ3mOBA9xBOX7U0J-0KjSJ9JpMYGrO9u903cTllZ74I5KwCnEJLAcbAw=" rel="nofollow noopener" target="_blank" title="">https://bespc.com/cases/CHGG</a><br><strong>Desktop Metal, Inc. (NYSE: DM)</strong><br>Class Period: March 15, 2021 – November 15, 2021<br>Lead Plaintiff Deadline: February 21, 2022<br>On February 16, 2021, the Company acquired EnvisionTEC, Inc. and certain of its affiliates (collectively, “EnvisionTEC”), a provider of volume production photopolymer 3D printing solutions for end use parts.<br>On November 8, 2021, after the market closed, Desktop Metal disclosed that it was conducting an internal investigation into certain matters, including “manufacturing and product compliance practices and procedures with respect to a subset of its photopolymer equipment and materials at its EnvisionTec US LLC facility.” The Company also stated that the Chief Executive Officer of EnvisionTec US LLC had resigned.<br>On this news, the Company’s stock fell $0.39, or 4%, to close at $8.81 per share on November 9, 2021.<br /> <br />Then, on November 15, 2021, after the market closed, the Company stated that it would notify the U.S. Food and Drug Administration (“FDA”) of “compliance issues with certain shipments of EnvisionTEC’s Flexcera dental resins and its PCA4000 curing box.”<br>On this news, the Company’s stock fell $1.19, or 15%, to close at $6.83 per share on November 16, 2021, on unusually heavy trading volume.<br>Throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that there were deficiencies in EnvisionTEC’s manufacturing and product compliance practices and procedures; (2) that the foregoing deficiencies presented a material risk to the commercialization of EnvisionTEC’s products; and (3) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.<br>For more information on the Desktop Metal class action go to: <a href="https://www.globenewswire.com/Tracker?data=REmljFI0KBJ6nv3b16puOP6-AieyRh9O4JL4cCYb__RihnQJxz3NlZXVq8-jGYca1_xKb1e5GRiy7Bckt1dAOnDQKDpXef5ZccACceBcibk=" rel="nofollow noopener" target="_blank" title="">https://bespc.com/cases/DM</a><br><strong>DocuSign, Inc. (NASDAQ: DOCU)</strong><br>Class Period: May 27, 2020 – December 2, 2021<br>Lead Plaintiff Deadline: February 21, 2022<br>The complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the impact of the Covid-19 pandemic on DocuSign’s business was positive, not negative; (2) DocuSign misrepresented the role that the Covid-19 pandemic had on its growth; (3) DocuSign downplayed the impact that a ‘return to normal’ would have on the Company’s growth and business; and (4) as a result, defendants’ public statements were materially false and misleading at all relevant times.<br>On this news, DocuSign’s stock price plummeted $98.73 per share, or over 42%, to close at $135.09 per share on December 3, 2021, damaging investors.<br>For more information on the DocuSign class action go to: <a href="https://www.globenewswire.com/Tracker?data=REmljFI0KBJ6nv3b16puOP6-AieyRh9O4JL4cCYb__TPXnjGa2PcHd7irUTuLV5F7fHZwHLymaMLLuhyEDb7YitfpxeRgaF1YlfPXs27ZvM=" rel="nofollow noopener" target="_blank" title="">https://bespc.com/cases/DOCU</a><br><strong>About Bragar Eagel &amp; Squire, P.C.:</strong><br>Bragar Eagel &amp; Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit <a href="https://www.globenewswire.com/Tracker?data=tA54eW8MxzYLjlIw-f8vaEaeT9WG3jxVtErSVgWaY3GIv_EESkgh6snCqxRfPMpGuw0IC0NHit94UdNm-_4liw==" rel="nofollow noopener" target="_blank" title=""><u>www.bespc.com</u></a>. Attorney advertising. Prior results do not guarantee similar outcomes.<br><strong>Contact Information:</strong><br>Bragar Eagel &amp; Squire, P.C.<br />Brandon Walker, Esq. <br />Alexandra B. Raymond, Esq.<br />(212) 355-4648<br /><a href="https://www.globenewswire.com/Tracker?data=amvo-IcncSI8yUzTp4tBJE3-q9V5GEP7u75_pXFip5jFuu-Q4PyUZ7ZbJHBWA4k55jsxQY41mB-VHgVEa0XDUi2WyFq2_b8WcbReJLziG9k=" rel="nofollow noopener" target="_blank" title="[email protected]">[email protected]</a><br /><a href="https://www.globenewswire.com/Tracker?data=tA54eW8MxzYLjlIw-f8vaP2ZxEyELLMLhcyWdwhd7Ter2H9NGJySErIdO97xlHg-KZxMTSUMyvKiIaQ4QnEIoA==" rel="nofollow noopener" target="_blank" title="www.bespc.com">www.bespc.com</a><br><br><br><a href="https://www.globenewswire.com/news-release/2022/01/29/2375301/0/en/Bragar-Eagel-Squire-P-C-Reminds-Investors-That-Class-Action-Lawsuits-Have-Been-Filed-Against-Exicure-Chegg-Desktop-Metal-and-DocuSign-and-Encourages-Investors-to-Contact-the-Firm.html">source</a>

Intel Corp. weathered another tough investor reaction to its earnings report Thursday, and analysts say the chip maker faces another potential challenge in addition to falling margins: A looming oversupply of PCs that promises to hit its largest business segment.
Shares of Intel INTC, -0.67% fell more than 6% Thursday and hit an intraday low of $47.78, their lowest trade since Dec. 22, 2020, when they touched $45.77. The stock was Thursday’s worst performer on the Dow Jones Industrial Average  DJIA, +1.65%, which was flat.
The stock was headed for the seventh-straight quarter in which it fell the day after earnings were reported, even though Intel beat earnings expectations each time. The average one-day post-earnings decline after the previous six earnings reports has been 9.7%, according to FactSet data.
While the chip maker easily topped Wall Street estimates for the quarter in an earnings report late Wednesday, results showed a 7% decline in revenue from client computing, the traditional PC group and Intel’s largest business unit, to $10.1 billion, which was higher than Wall Street’s estimate of $9.59 billion.
The company’s forecast elicited concern, however, not just because Intel reported that fourth-quarter margins fell to 55.4% from 60% in the year-ago quarter, but because of signs the PC boom that Intel has enjoyed is swiftly coming to an end.
For the first quarter, Intel forecast adjusted first-quarter earnings of 80 cents a share on revenue of about $18.3 billion, while analysts surveyed by FactSet on average had expected earnings of 86 cents a share on revenue of $17.61 billion. The company is holding off on giving an annual guidance until its Feb. 17 investor day.
Outside of the falling margins question, which has been on the table since last quarter, analysts seemed to be more concerned this time around with how an expected drop in PC growth will hurt Intel as it’s trying to rebuild itself.
Bernstein analyst Stacy Rasgon, who has an underperform rating and a $40 price target, in a note entitled “Purgatory,” noted that Intel’s forecast “could conceivably be weaker than it appeared on the surface” because the first quarter contains an extra week compared with a year ago.
From there, the analyst focused on a forecast correction in PC growth that appears on the horizon. In 2021, PC shipments hit their highest levels in nearly a decade fueled by the COVID-19 pandemic.
“PC CPUs [central processing units] (which we have believed were overshipping, particularly in notebooks) are now definitively entering correction which may make unit growth next year challenging even if PCs stay strong, and the datacenter trajectory is being driven by likely unsustainable enterprise strength (+53% [year-over-year]) with 5 quarters in a row of cloud declines (worrisome),” Rasgon said.
Read: Chips may be sold out for 2022 thanks to shortage, but investors are worried about the end of the party
Evercore ISI analyst C.J. Muse, who has an in-line rating and a $55 price target, said that while demand for chips remains strong, “market fears around inventory build may be coming to surface for PC CPUs.”
“Intel guided March Q revenues down 6% [quarter-over-quarter] led by [notebook] declines as customers burn built-up CPU inventory,” Muse said. “Customers ordered CPUs based on robust end-demand trends in CY21, but could not get matched sets given ongoing industry constraints and are now forced to burn the overbuilt components.”
“The bad news, this clearly flames the bear debate around pockets of inventory builds,” said Muse. “The good news, this dynamic does not speak to end-demand, but rather just a transitory issue (though INTC does expect constraints to last into CY23).”
Citi Research analyst Christopher Danley, who has a neutral rating and lowered his price target to $55 from $58, said Intel’s expected inventory correction in the notebook end market was a “red flag.”
“Prior to 2020, PC units declined 1% on average, at about 260 million units per year,” Danley said. “Due to work/school from home trends, PC units grew 14% to 299 million units in 2020 and roughly 12% to 335 million in 2021, well above the average historical decline of 1%.”
“However, we expect this trend to revert to the mean in 2H22 as PC demand matures and with inventory correction after two consecutive years of double-digit growth,” Danley said.
Cowen analyst Matthew Ramsay, who has an outperform rating and a $60 price target, called Intel’s report a “complicated quarter,” in that while revenue benefited from PC growth and business spending, falling margins posed a “tougher reality.”
“The magnitude and reality is settling in for investors…which may ultimately be a good thing in our view, as it potentially allows sentiment to bottom with a margin bottom soon to follow…though the key will be plotting a credible path to recovery,” Ramsay said.
Of the 40 analysts who cover Intel, 10 have buy ratings, 21 have hold ratings, and nine have sell ratings, along with an average price target of $54.43, according to FactSet.
Collins's sponsorship with New Balance ended last summer, though she does have a deal with a wealth advisory firm.
Wallace Witkowski came to MarketWatch from the Associated Press in New York, where he was a business reporter specializing in pharmaceutical companies. He previously reported for trade publications in covering the drug and medical-device industries back to 1998. Based in San Francisco, his focus is on U.S. equities. Follow Wally on Twitter at: @wmwitkowski.

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