Microsoft lowers fourth-quarter guidance, warns of forex hit
• Microsoft expects to report between $51.94 billion and $52.74 billion in revenue and profit between $2.24 and $2.32 per share
• Wall Street is expecting revenue of $52.87 billion and an EPS of $2.33
Microsoft Corp (NASDAQ: MSFT) on Thursday lowered its fiscal fourth-quarter forecast for profit and revenue, citing unfavorable foreign exchange rate movement.
Shares of the US tech giant dropped nearly 4% in New York following the news.
The Redmond-based company said it expects to report between $51.94 billion and $52.74 billion in revenue for the quarter, down from its prior range of $52.40 billion to $53.20 billion.
It cut the profit forecast to be between $2.24 and $2.32 per share from a prior expectation of between $2.28 and $2.35 per share.
Wall Street expects Q4 revenue of $52.87 billion and an EPS of $2.33.
Hawkish Federal Reserve and heightened geopolitical tensions have forced the US dollar to jump 14% against a basket of currencies compared to the last year.
A stronger greenback typically uses up a significant amount from the profits of companies with expansive international businesses that convert foreign currency into dollars.
Microsoft gets almost half of its revenue from outside the United States.
In April, the company CFO Amy Hood suggested that exchange rates could impact guidance.
“We expect other income and expense to be negative $50 million reflecting FX remeasurement impact based on market conditions in April,” Hood said. “Similar to the rest of our guidance, further equity and FX movements thru Q4 are not reflected in this number.”
Picture Credit: FT
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