Microsoft suffers from cost inflation

Source: Dukascopy Bank SA


The stock price of Microsoft is set to start the day's trading with a drop, despite beating quarterly earnings expectations. In general, the company has given up most of its revenue gains to higher costs, due to which the profit increase has been minor.

Earnings per share were expected to show a reading of $2.937, but the actual number is $2.95. Meanwhile, the total revenue was forecast to be $64.38 billion. Published data shows $64.727 in revenue.

The decline is attributed to a simple factor. Microsoft stock has surged in value by 20.50% on a year on year basis, but revenues have growth 15.00% and profit has increased by 10.00%. The company is not only grown less than reflected in the stock price, but is also experiencing increasing costs. Rising costs have been impacting most of the tech sector.

From a quarterly perspective, MSFT has surged 3.39% on a quarter on quarter basis. Revenue increased by 4.64%, but profits grew just 0.44%. Most of the growth of the company during the quarter has been spent in costs.
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