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Microsoft beats on earnings as cloud unit shows strong growth

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Microsoft CEO Satya Nadella speaks at the company’s Ignite Spotlight event in Seoul on Nov. 15, 2022. Nadella gave a keynote speech at an event hosted by the company’s Korean unit.

SeongJoon Cho | Bloomberg | Getty Images

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Microsoft shares rose as much as 5% in extended trading on Tuesday after the company reported fiscal second quarter earnings that topped analysts’ estimates.

Here’s how the company did:

  • Earnings: $2.32 per share, adjusted, vs. $2.29 per share as expected by analysts, according to Refinitiv.
  • Revenue: $52.75 billion, vs. $52.94 billion as expected by analysts, according to Refinitiv.

Microsoft’s total revenue increased by 2% year over year in that quarter ending Dec. 31, the slowest rate since 2016, according to a statement. Net income fell to $16.43 billion from $18.77 billion in the year-ago quarter. The company took a $1.2 billion charge in the quarter in connection with its decision to cut 10,000 jobs, revise its hardware lineup and consolidate leases.

“We are focused on operational excellence as we continue to invest to drive growth,” Amy Hood, Microsoft’s finance chief, was quoted as saying in the statement.

Revenue in Microsoft’s Intelligent Cloud segment amounted to $21.51 billion, up 18% and slightly above the $21.44 billion consensus among analysts polled by StreetAccount. The unit includes the Azure public cloud, Windows Server, SQL Server, Nuance and Enterprise Services. Revenue from Azure and other cloud services, which Microsoft does not report in dollars, grew by 31%, slightly above the estimate of just under 31% that analysts polled by CNBC and StreetAccount had expected. In the previous quarter, the category grew 35%.

The Productivity and Business Processes segment, containing Microsoft 365 — formerly known as Office 365 — productivity software, LinkedIn and Dynamics, delivered $17.00 billion in revenue, up 7% and more than the StreetAccount consensus of $16.79 billion.

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The More Personal Computing segment featuring Windows, Xbox, Surface and search advertising contributed $14.24 billion, representing a revenue decline of 19%. Technology industry researcher Gartner estimated that during the fourth quarter of 2022 the PC business had its slowest growth since the company started keeping track of the market in the mid-1990s.

The decision to reduce head count “shows a commitment to margin defense despite top-line shakiness,” analysts at Raymond James wrote in a note to clients Monday. They recommend buying Microsoft shares.

In the quarter the U.S. Federal Trade Commission sued Microsoft to block its pending $69 billion acquisition of game publisher Activision Blizzard, while the U.S. Defense Department awarded Microsoft and three other companies a cloud contract worth up to $9 billion combined. Also, Microsoft introduced Designer, an application in which people can craft documents such as social media posts and event invitations.

Excluding the after-hours move, Microsoft stock is flat so far this year, while the S&P 500 stock index is up 4%.

Executives will discuss its quarterly results with analysts and issue guidance on a conference call Tuesday starting at 5:30 p.m. ET.

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This is breaking news. Please check back for updates.

Correction: This story has been updated to reflect that Microsoft’s conference call with analysts will start Tuesday at 5:30 p.m. ET. A previous version gave an incorrect time.

WATCH: Longer term, Microsoft has a massive secular growth story, says Oppenheimer’s Horan

Longer term, Microsoft has a massive secular growth story, says Oppenheimer's Horan



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Twitter Blue users can now write 4,000-character tweets

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Twitter on Thursday announced that Blue subscribers in the US can now post long tweets of up to 4,000 characters on the micro-blogging platform. Also Read – Airtel 5G Plus is now available in four cities in Himachal Pradesh: Check availability here

The company posted from its @TwitterBlue account: “Starting today, if you’re subscribed to Twitter Blue in the US you can create longer tweets. Also Read – HMD Global teases launch of Nokia X30 in India, but how is PM Modi involved?

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“Most standard functions of Tweeting still apply, whether you want to post a picture, use a hashtag, or create a poll. But now you can type all the way up to 4,000 characters.” Also Read – Realme GT 3 global launch confirmed, India launch signaled

However, for now, longer tweets on the web cannot be saved as drafts or scheduled to be sent later.

“We know longer tweets could mean a lot of scrolling, so they’ll be capped at 280 characters on your timeline and you’ll see a ‘Show more’ prompt to click and read the whole tweet,” it added.

Only Blue subscribers can post longer Tweets, but non-subscribers can read, reply, retweet, and quote Tweet to them.

Moreover, Blue users will be able to reply and quote a longer tweet with up to 4,000 characters, the platform mentioned.

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Earlier, tweets were limited to only 280 characters, which still applies to non-subscribers.

–IANS



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Google Bard flubs answer in ad. That mistake cost Google billions

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Alphabet Inc lost $100 billion in market value on Wednesday after its new chatbot shared inaccurate information in a promotional video and a company event failed to dazzle, feeding worries that the Google parent is losing ground to rival Microsoft Corp. Also Read – Google’s VP of labs, Salesforce’s former co-CEO to form AI company

Alphabet shares slid as much as 9 percent during regular trading with volumes nearly three times the 50-day moving average. They pared losses after hours and were roughly flat. The stock had lost 40 percent of its value last year but rallied 15 percent since the beginning of this year, excluding Wednesday’s losses. Also Read – Microsoft Bing gets an even powerful language model than ChatGPT, Edge browser gets AI features

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Reuters was first to point out an error in Google’s advertisement for chatbot Bard, which debuted on Monday, about which satellite first took pictures of a planet outside the Earth’s solar system. Also Read – Microsoft surprise event today: Is ChatGPT powered Bing search finally releasing?

Google has been on its heels after OpenAI, a startup Microsoft is backing with around $10 billion, introduced software in November that has wowed consumers and become a fixation in Silicon Valley circles for its surprisingly accurate and well-written answers to simple prompts.

Google’s live-streamed presentation on Wednesday morning did not include details about how and when it would integrate Bard into its core search function. A day earlier, Microsoft held an event touting that it had already released to the public a version of its Bing search with ChatGPT functions integrated.

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Bard’s error was discovered just before the presentation by Google, based in Mountain View, California.

“While Google has been a leader in AI innovation over the last several years, they seemed to have fallen asleep on implementing this technology into their search product,” said Gil Luria, senior software analyst at D.A. Davidson. “Google has been scrambling over the last few weeks to catch up on Search and that caused the announcement yesterday (Tuesday) to be rushed and the embarrassing mess up of posting a wrong answer during their demo.”

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Microsoft shares rose around 3 percent on Wednesday and were flat in post-market trading.

Alphabet posted a short GIF video of Bard in action via Twitter, promising it would help simplify complex topics, but it instead delivered an inaccurate answer.

In the advertisement, Bard is given the prompt: “What new discoveries from the James Webb Space Telescope (JWST) can I tell my 9-year-old about?” Bard responds with a number of answers, including one suggesting the JWST was used to take the very first pictures of a planet outside the Earth’s solar system, or exoplanets. The first pictures of exoplanets were, however, taken by the European Southern Observatory’s Very Large Telescope (VLT) in 2004, as confirmed by NASA.

“This highlights the importance of a rigorous testing process, something that we’re kicking off this week with our Trusted Tester program,” a Google spokesperson said. “We’ll combine external feedback with our own internal testing to make sure Bard’s responses meet a high bar for quality, safety and groundedness in real-world information.”

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Formidable competitor

Alphabet is coming off a disappointing fourth quarter as advertisers cut spending.

The search and advertising giant is moving quickly to keep pace with OpenAI and rivals, reportedly bringing in founders Sergey Brin and Larry Page to accelerate its efforts.

“People are starting to question is Microsoft going to be a formidable competitor now against Google’s really bread-and-butter business,” said King Lip, chief strategist at Baker Avenue Wealth Management, which owns Alphabet and Microsoft shares.

Lip cautioned, though, that concerns about Alphabet may be overblown, saying: “I think still Bing is a far, far cry away from Google’s search capabilities.”

The new ChatGPT software has injected excitement into technology firms after tens of thousands of job cuts in recent weeks and executive pledges to pare back on so-called moonshot projects. AI has become a fixation for tech executives who have mentioned it as much as six times more often on recent earnings calls than in prior quarters, Reuters found.

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The appeal of AI-driven search is that it could spit out results in plain language, rather than in a list of links, which could make browsing faster and more efficient. It remains unclear what impact that might have on targeted advertising, the backbone of search engines like Google.

Chatbot AI systems also carry risks for corporations because of inherent biases in their algorithms that can skew results, sexualize images or even plagiarise, as consumers testing the service have discovered. Microsoft, for instance, released a chatbot on Twitter in 2016 that quickly began generating racist content before being shut down. And an AI used by the news site CNET was found to produce factually incorrect or plagiarized stories.

At the time of writing, the Bard ad had been viewed on Twitter more than a million times.

— Reuters

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Tech layoffs: Disney CEO announces to fire 7,000 employees

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Entertainment giant Disney is laying off 7,000 employees to cut costs, its CEO Bob Iger has announced. During the company’s earnings call for its December quarter, he said the move is “necessary to address the challenges we’re facing today”. Also Read – Zoom fires 1,300 employees, CEO takes 98 percent pay cut

Disney to lay off 7,000 employees

“I do not make this decision lightly. I have enormous respect and appreciation for the talent and dedication of our employees worldwide and I am mindful of the personal impact of these changes,” said Iger. Also Read – How to watch Black Panther: Wakanda Forever online

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On the content side, Disney expects to deliver approximately $3 billion in savings over the next few years, excluding sports. Also Read – Airtel introduces Disney Plus Hotstar subscription for three prepaid plans

He said that under the strategic reorganisation, there will be three core business segments: Disney Entertainment, ESPN and Disney Parks, Experiences and Products.

“This reorganisation will result in a more cost-effective, coordinated and streamlined approach to our operations and we are committed to running our businesses more efficiently, especially in a challenging economic environment. In that regard, we are targeting $5.5 billion of cost savings across the company,” said the CEO.

The company’s streaming business lost around $1.5 billion last quarter.

Its current forecasts indicate Disney+ will hit profitability by the end of fiscal 2024.

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Disney Plus added just 200,000 subscribers in the US and Canada for a total of 46.6 million, while its international offering (excluding HotStar) saw the addition of 1.2 million members.

Disney’s direct-to-consumer division, which includes its streaming services, saw a 13 percent increase in revenue to $5.3 billion, with an operating loss of nearly $1.1 billion.

–IANS

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