Microsoft Surface 2022 Holiday lineup

Microsoft yesterday announced the financial results for the quarter ended December 31, 2022. The numbers ($52.7 billion revenue and $16.4 billion net income) did not meet analyst expectations. The modest growth from Office and Azure was offset by the huge decline in Windows and Devices business.

Windows OEM revenue declined 39% YoY. Also, the revenue of Devices business which includes Surface devices declined 39% YoY. Microsoft mentioned that Devices business revenue decline was driven by weakness in PC market and execution challenges on new product launches. Even Xbox hardware revenue was down 13% YoY.

The bad news is that Microsoft expects this trend to continue in the next quarter as well.

Windows OEM revenue is expected to decline in the mid-to-high 30s in line with the PC market. And the Devices business revenue should decline in the mid 40s, as Microsoft work through the execution challenges.