The ongoing supply chain and chip shortages have hit Microsoft’s hardware plans and the company said that it expects revenue to decline to single digits as it continues to work through supply chain uncertainty, particularly in its premium devices.
The tech giant said that in gaming, on a high prior-year comparable that included the launch of its new Xbox consoles and strength across Xbox content and services, it expects revenue growth in the high single digits.
“Console sales will continue to be impacted by supply chain uncertainty,” Amy Hood, Chief Financial Officer at Microsoft, said in a statement late on Tuesday.
Giving a forecast for its next fiscal quarter (Q2 2022), Hood said that in the ‘More Personal Computing’ vertical, “We expect revenue between $16.35 billion and $16.75 billion despite ongoing supply chain constraints”.
The company posted revenue of $13.3 billion for its July-September quarter, with better than expected performance in Windows OEM and gaming. Surface revenue declined 17 per cent and 19 per cent in constant currency on a strong prior-year comparable.
In the earnings call with analysts, Hood said that if supply chain uncertainty reduces advertising budgets, “our results would be negatively impacted” for the next quarter.
“In Xbox content services, we expect revenue growth in the mid-teens with strong engagement on the Xbox platform in a holiday quarter that will include several AAA title launches,” the company noted.
Earlier this month, Microsoft launched Windows 11, the biggest update to its operating system in a decade.
“There has been a structural shift in PC demand emerging from this pandemic and we’re delighted with the early response to Windows 11. With every new generation of Windows, we also unlock the next generation of hardware innovation across our ecosystem,” said Satya Nadella, Chairman and CEO of Microsoft.