Salesforce has already gone to work by slashing sales forecasts on Tuesday night. Microsoft will follow on Thursday. However, the tech giant is not only lowering sales forecasts, but also profit forecasts. Shares of Microsoft are down 3.5 percent in premarket trading.
Microsoft issued a sales and earnings warning on Thursday due to currency effects. In the fourth quarter of 2022 (until the end of May), the US group only expects sales of between 51.940 and 52.740 million dollars. As of April 26, management still expected revenue of between $52.4 billion and $53.2 billion.
Microsoft is also holding back the net profit forecast for 4/22. Adjusted earnings guidance is now $20.60 billion to $21.30 billion, up from $20.90 billion to $21.60 billion.
In its power Point presentation management justifies the adjustment with negative exchange effects. This is not surprising, as the dollar has appreciated against a multitude of currencies in recent times. The dollar index rose to a multi-year high of 105.07 points in mid-May, the highest value since 2002. The dollar has appreciated particularly strongly against the yen, for example by 12.7% since the beginning of year.
The currency effects are quite manageable for Microsoft and the stock’s current weakness should end soon. Investors continue to invest and let the profits run, especially since the strength of the dollar is also playing into the hands of investors in euros.
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