Executive Chairman and CEO of Microsoft Corporation Satya Nadella speaks during the “Microsoft Build: AI Day” event in Bangkok, Thailand, May 1, 2024.
Chalinee Thirasupa | Reuters
Microsoft on Wednesday updated quarterly revenue guidance for its three business segments in a shift that stands to give investors better visibility into the software maker’s growing cloud infrastructure business.
The company is bulking up the Productivity and Business Processes segment that includes Office productivity software subscriptions with services that have for years appeared inside the Intelligent Cloud unit that features Azure.
Productivity and Business Processes will also gain Windows commercial products and cloud services, a part of the More Personal Computing segment that includes volume licensing of the Windows operating system and cloud-based Windows tools.
Microsoft is removing the Power BI data analytics tool and the Enterprise Mobility and Security group of products from a closely watched year-over-year growth metric called Azure and other cloud services.
With those two moving out, the new Azure number “now more closely aligns to consumption business,” Microsoft said in an investor presentation summarizing the changes. Consumption reflects commercial clients actively using computing and storage services in Azure.
But Microsoft is adding revenue from its search and news advertising category — which until now was under More Personal Computing — into Azure and other cloud services.
The company said it expects 33% constant-currency revenue growth for Azure and other cloud services under the new definition for the fiscal first quarter, down 1 to 2 percentage points from the fiscal fourth quarter. In late July, based on the prior Azure definition, the company had called for growth of 28% to 29% at constant currency. Historically, consumption has driven growth in Azure and other cloud services, rather than the per-user tools, where growth in the number of seats has slowed.
“We got more visibility on Azure,” said Jason Ader, an William Blair analyst with the equivalent of a buy rating on Microsoft shares. He cited the removal of the per-user elements of Azure growth that Microsoft has included in the tally for years, making it more difficult to understand consumption.
Amazon discloses revenue for its market-leading Amazon Web Services division, but Microsoft’s financial reporting method for Azure has featured the per-user pieces, meaning that making comparisons is not straightforward.
Additionally, Microsoft said it will give Productivity and Business Processes some revenue stemming from its 2022 Nuance Communications acquisition that has appeared under Intelligent Cloud. And every quarter the company will disclose a combined growth rate for Windows and for devices, instead of communicating them separately, given that these are both PC-oriented.
A new metric called Microsoft 365 Commercial will appear inside the Productivity and Business Processes segment. It will include revenue from Office commercial products and cloud services, Power BI, Enterprise Mobility and Security and Windows commercial products and cloud services. The change comes “to align how the business is managed,” Microsoft said in the presentation.
But with so much going into Productivity and Business Processes, Ader said the company might be making it more difficult for investors to understand the health of core commercial subscriptions for Office productivity software. A slowdown in growth is a “minor concern” among investors, Ader said.
The More Personal Computing segment is picking up revenue from subscriptions to Copilot Pro, which brings generative artificial intelligence capabilities to Word, Excel and other applications for consumers. That revenue has shown up in Productivity and Business Processes since Copilot Pro’s introduction earlier this year.
As a result of the many adjustments, Microsoft now sees $27.75 billion to $28.05 billion in fiscal first-quarter revenue from the Productivity and Business Processes Segment, up from the range of $20.3 billion to $20.6 billion it provided in late July.
The forecast calls for Intelligent Cloud revenue between $23.80 billion and $24.10 billion, down from $28.6 billion to $28.9 billion. And it shows More Personal Computing revenue in the range of $12.25 billion to $12.65 billion, compared with $14.9 billion to $15.3 billion before.
But Microsoft continues to expect around $64.3 billion in revenue across the board. And it does not anticipate change to cost of revenue, operating expenses, other income and expense or tax rate.
Amazon logo on a brick building exterior, San Francisco, California, August 20, 2024.
Smith Collection | Gado | Archive Photos | Getty Images
Amazon representatives met with the House China committee in recent months to discuss lawmaker concerns over the company’s partnership with TikTok, CNBC confirmed.
A spokesperson for the House Select Committee on the Chinese Communist Party confirmed the meeting, which centered on a shopping deal between Amazon and TikTok announced in August. The agreement allows users of TikTok, owned by China’s ByteDance, to link their account with Amazon and make purchases from the site without leaving TikTok.
“The Select Committee conveyed to Amazon that it is dangerous and unwise for Amazon to partner with TikTok given the grave national security threat the app poses,” the spokesperson said. The parties met in September, according to Bloomberg, which first reported the news.
Representatives from Amazon and TikTok did not immediately respond to CNBC’s request for comment.
TikTok’s future viability in the U.S. is uncertain. In April, President Joe Biden signed a law that requires ByteDance to sell TikTok by Jan. 19. If TikTok fails to cut ties with its parent company, app stores and internet hosting services would be prohibited from offering the app.
President-elect Donald Trump could rescue TikTok from a potential U.S. ban. He promised on the campaign trail that he would “save” TikTok, and said in a March interview with CNBC’s “Squawk Box” that “there’s a lot of good and there’s a lot of bad” with the app.
In his first administration, Trump had tried to implement a TikTok ban. He changed his stance around the time he met with billionaire Jeff Yass. The Republican megadonor’s trading firm, Susquehanna International Group, owns a 15% stake in ByteDance, while Yass has a 7% stake in the company, NBC and CNBC reported in March.
— CNBC’s Jonathan Vanian contributed to this report.
A worker delivers Amazon packages in San Francisco on Oct. 24, 2024.
David Paul Morris | Bloomberg | Getty Images
Amazon on Thursday announced Prime members can access new fixed pricing for treatment of conditions like erectile dysfunction and men’s hair loss, its latest effort to compete with other direct-to-consumer marketplaces such as Hims & Hers Health and Ro.
Shares of Hims & Hers fell as much as 17% on Thursday, on pace for its worst day.
Amazon said in a blog post that Prime members can see the cost of a telehealth visit and their desired treatment before they decide to proceed with care for five common issues. Patients can access treatment for anti-aging skin care starting at $10 a month; motion sickness for $2 per use; erectile dysfunction at $19 a month; eyelash growth at $43 a month, and men’s hair loss for $16 a month by using Amazon’s savings benefit Prime Rx at checkout.
Amazon acquired primary care provider One Medical for roughly $3.9 billion in July 2022, and Thursday’s announcement builds on its existing pay-per-visit telehealth offering. Video visits through the service cost $49, and messaging visits cost $29 where available. Users can get treatment for more than 30 common conditions, including sinus infection and pink eye.
Medications filled through Amazon Pharmacy are eligible for discounted pricing and will be delivered to patients’ doors in standard Amazon packaging. Prime members will pay for the consultation and medication, but there are no additional fees, the blog post said.
Amazon has been trying to break into the lucrative health-care sector for years. The company launched its own online pharmacy in 2020 following its acquisition of PillPack in 2018. Amazon introduced, and later shuttered, a telehealth service called Amazon Care, as well as a line of health and wellness devices.
The company has also discontinued a secretive effort to develop an at-home fertility tracker, CNBC reported Wednesday.
Former U.S. Army intelligence analyst Chelsea Manning says censorship is still “a dominant threat,” advocating for a more decentralized internet to help better protect individuals online.
Her comments come amid ongoing tension linked to online safety rules, with some tech executives recently seeking to push back over content moderation concerns.
Speaking to CNBC’s Karen Tso at the Web Summit tech conference in Lisbon, Portugal, on Wednesday, Manning said that one way to ensure online privacy could be “decentralized identification,” which gives individuals the ability to control their own data.
“Censorship is a dominant threat. I think that it is a question of who’s doing the censoring, and what the purpose is — and also censorship in the 21st century is more about whether or not you’re boosted through like an algorithm, and how the fine-tuning of that seems to work,” Manning said.
“I think that social media and the monopolies of social media have sort of gotten us used to the fact that certain things that drive engagement will be attractive,” she added.
“One of the ways that we can sort of countervail that is to go back to the more decentralized and distribute the internet of the early ’90s, but make that available to more people.”
Nym Technologies Chief Security Officer Chelsea Manning at a press conference held with Nym Technologies CEO Harry Halpin in the Media Village to present NymVPN during the second day of Web Summit on November 13, 2024 in Lisbon, Portugal.
Asked how tech companies could make money in such a scenario, Manning said there would have to be “a better social contract” put in place to determine how information is shared and accessed.
“One of the things about distributed or decentralized identification is that through encryption you’re able to sort of check the box yourself, instead of having to depend on the company to provide you with a check box or an accept here, you’re making that decision from a technical perspective,” Manning said.
‘No longer secrecy versus transparency’
Manning, who works as a security consultant at Nym Technologies, a company that specializes in online privacy and security, was convicted of espionage and other charges at a court-martial in 2013 for leaking a trove of secret military files to online media publisher WikiLeaks.
She was sentenced to 35 years in prison, but was later released in 2017, when former U.S. President Barack Obama commuted her sentence.
Asked to what extent the environment has changed for whistleblowers today, Manning said, “We’re at an interesting time because information is everywhere. We have more information than ever.”
She added, “Countries and governments no longer seem to invest the same amount of time and effort in hiding information and keeping secrets. What countries seem to be doing now is they seem to be spending more time and energy spreading misinformation and disinformation.”
Manning said the challenge for whistleblowers now is to sort through the information to understand what is verifiable and authentic.
“It’s no longer secrecy versus transparency,” she added.