(Bloomberg) -- Microsoft Corp. said revenue growth in its closely watched Azure cloud-computing business will drop by five percentage points in the current period from the prior quarter, sending shares reeling in late trading.
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Azure sales rose 42% in the fiscal first quarter, excluding the impact of foreign-currency exchange rates, meaning Chief Financial Officer Amy Hood’s forecast implies a gain of 37% for the second quarter, which ends in December. The downbeat outlook added to investor concerns that demand is slowing for Azure, which lets companies run and store software applications.
On a conference call to discuss earnings Tuesday, Hood said demand for Azure and new contract signings both remain strong among large customers, but the software maker is helping “customers optimize current workloads,” meaning Microsoft is aiding customers to run applications and tasks more efficiently and at a lower cost.
Earlier, Microsoft posted its weakest quarterly revenue growth in five years, throttled by the surging U.S. dollar and a slump in sales of Windows software to personal-computer makers.
Shares slid as much as 8.1% to $230.39 in extended trading following the company’s forecast. They had risen to $250.66 at the close in New York. While the stock jumped 51% in 2021, it has fallen 25% so far this year amid a rout in large technology stocks. During the recent quarter, the company’s shares declined 9.3%, while the Standard & Poor’s 500 Index dropped 5.3%.
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