Is the US Government Shutdown Hurting Microsoft?



Microsoft says the shutdown isn’t good for business

Speaking on CNBC recently, Microsoft’s (MSFT) chief legal officer, Brad Smith, said that the current partial shutdown of the US government isn’t good for Microsoft’s business.

Although the executive wouldn’t disclose how much damage Microsoft may have suffered as a result of the ongoing shutdown, the company does business with government agencies, meaning it’s exposed to the shutdown’s negative effects. Smith pointed out that some government agencies Microsoft does business with are continuing to operate despite the shutdown.

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Microsoft’s revenue rose 19%

Microsoft generated $29.1 billion in revenue in its first quarter of fiscal 2019 (which ended in September 2018), representing a revenue rise of 19% YoY (year-over-year) compared to the revenue rise of 7.7% YoY at SAP SE (SAP), one of Microsoft’s enterprise software competitors. In the same period, revenue fell 2.1% YoY at IBM (IBM), another longtime Microsoft software rival.

Microsoft’s cloud computing rivals Amazon (AMZN) and Alphabet (GOOGL) grew their third-quarter revenues 29% and 21% YoY, respectively.

Although it’s best-known as a software company, Microsoft has sought to diversify its business in recent years. For example, it’s ventured into the hardware market, where it sells personal computing devices under the Surface brand.

Gearing up to report its latest results

Microsoft is scheduled to release its fiscal 2019 second-quarter earnings results on January 30. The company has guided for second-quarter revenue in the range of $31.9 billion–$32.7 billion. Analysts’ consensus estimate calls for Microsoft to report revenue of at least $32 billion in the quarter.


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