Microsoft beats expectations last quarter, regulators worry about sky-high deal to buy Activision Blizzard

　　On January 26, Microsoft released its fiscal 2022 second-quarter earnings report.

According to the financial report, Microsoft’s revenue for the quarter was $51.7 billion, a year-on-year increase of 20%, exceeding Wall Street’s previous forecast of $50.9 billion.

　　Under the US GAAP, Microsoft's net profit for the quarter was US$18.8 billion, a year-on-year increase of 21%; under non-GAAP, Microsoft's net profit for the quarter was US$18.8 billion, a year-on-year increase. up 21%.

　　By division, Microsoft's Productivity and Business Processes segment reported first-quarter revenue of $15.9 billion, up 19 percent from a year earlier.

Among them, Office commercial products and cloud services revenue increased 14%, which was attributed to a 19% increase in Office 365 commercial revenue.

LinkedIn revenue rose 37% in the quarter.

Revenue from Office consumer products and cloud services rose 15%, with Microsoft 365 consumer subscribers increasing to 56.4 million.

Dynamics products and cloud services revenue rose 29%, driven by a 45% increase in Dynamics 365 revenue.

　　Revenue from Microsoft's Intelligent Cloud segment was $18.3 billion, up 25% year over year.

Server products and cloud services revenue rose 29%, driven by a 46% increase in Azure and other cloud services revenue.

　　More personal computing revenue was $17.5 billion, up 15% year over year.

Among them, Windows commercial products and cloud services increased by 13%, and search and news advertising revenue excluding traffic acquisition costs increased by 32%.

Surface, which was affected by the tight global chip supply chain, increased its revenue by 8% in the quarter. Surface revenue continued to decline for two consecutive quarters. As Surface revenue increased, Microsoft may have stepped out of the impact of the supply chain decline.

　　In addition, the oft-cited Xbox content and services revenue grew by 10% recently, and the Xbox business grew by 40% in the same period last year due to the impact of the housing economy.

　　Satya Nadella, chairman and CEO of Microsoft, said in the financial report, "As technology continues to account for an increasing share of global GDP, we are building a global business model through a common underlying technology stack and an operating model that reinforces a common strategy, culture and sense of purpose. Innovate and invest in a diverse and growing market.”

　　Investments and acquisitions are Microsoft's long-term strategy.

On January 19, Microsoft announced it was buying Call of Duty maker Activision Blizzard for $68.7 billion, a deal that became the largest gaming industry deal ever.

Activision Blizzard-developed games include Call of Duty, World of Warcraft, and Overwatch, as well as an extensive back catalog.

Satya Nadella said, "Games are the most dynamic and exciting category of entertainment on all platforms today, and will play a key role in the development of the Metaverse platform."

　　After the announcement, Microsoft’s share price fell slightly in recent days. As of press time, Microsoft’s share price was $288.49, with a market value of $2.17 trillion, a decline from last year’s high of $310.

　　For the gaming industry, Microsoft has maintained a long-term investment interest.

In September 2020, Microsoft announced the acquisition of interactive entertainment company ZeniMax and its game studio Bethesda for $7.5 billion.

The news was a blockbuster in the gaming world at the time.

The cost of acquiring Activision Blizzard was nine times that of acquiring Bethesda.

Last year, Microsoft negotiated an acquisition with game chat company Discord for more than $10 billion, but Discord subsequently terminated the acquisition talks with Microsoft.

　　At the same time, the biggest acquisition in gaming industry history has raised concerns that Microsoft could face a regulatory probe.

Andre Barlow of Doyle LLP said Microsoft has so far avoided the scrutiny faced by Google and Facebook, but the deal would make it the world's third-largest gaming company, which would put it under the radar of lawmakers.

　　The Bethesda deal, announced in September 2020, won’t actually close until March 2021, while Activision Blizzard doesn’t expect to close until sometime in the company’s fiscal 2023, after clearing the required regulatory hurdles,media said.

But as the acquisition makes Microsoft the third-largest gaming company in the world, the acquisition could come under the radar of regulators for potential antitrust violations.