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TheStreet 

UBS analyst Karl Keirstead warns of a “steep growth deceleration” for Microsoft’s flagship cloud division.

Microsoft  (MSFT) – Get Free Report shares moved lower Wednesday after analysts at UBS lowered their rating on the tech giant, citing weakness in its flagship cloud division.

UBS analyst Karl Keirstead lowered his rating on Microsoft to ‘neutral’ from “buy’, while shaving $50 from his price target to $250 per share, as he cautioned that its Azure cloud offering is heading for a sharp deceleration in growth, due to what he called “maturation, not just a tough macro”. He also noted vulnerability in Microsoft’s Office 365 business as clients cut back on hiring and retrench for slower growth.

Azure revenues rose 35% over the three months ending in October, the group’s fiscal first quarter, slowing notably from its prior quarter gains in the mid to high 40-percent range as companies pulled back on digital infrastructure spending as companies pulled back on digital infrastructure spending. Microsoft said that rate will slow further into the second quarter even after stripping away the impact of the stronger U.S. dollar.

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The group also forecast lower-than-expected revenues from its umbrella ‘intelligent cloud’ division, which it sees between $21.25 billion and $21.55 billion, as well as its personal computing business, with a forecast range of between $14.5 billion and $14.9 billion.

Microsoft shares were marked 1.95% lower in pre-market trading to indicate an opening bell price of $234.94 each.

Microsoft will likely publish its second quarter earnings on January 24, with early projections pointing to an adjusted bottom line of $2.30 pe share on revenues of around $53 billion.

For the three months ending in September, overall group revenues rose 10.5% to $50.1 billion, just ahead of Street forecasts, while its bottom fell 15% to $17.3 billion.

Productivity and business division revenues rose 9% to $16.5 billion, Microsoft said, while Intelligent Cloud revenues were up 24% to $25.7 billion. More Personal Computing revenues rose only 3% to $13.3 billion.

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TheStreet 

“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” said CEO Marc Benioff.

Salesforce  (CRM) – Get Free Report shares jumped higher Wednesday after the enterprise software group unveiled plans to cut around 10% of its global workforce amid a restructuring strategy under stand-alone CEO Marc Benioff. 

Salesforce said it will close some of its offices, while eliminating around 10% of its estimated 56,600 workforce, as it looks to reduce operating costs, improve operating margins and “continue advancing the company’s ongoing commitment to profitable growth”. Salesforce said the job cuts, as well as the broader restructuring plans,, will cost between $1.4 billion and $2.1 billion, with a hit of around $1 billion expected over its fiscal fourth quarter.

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“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” Benioff said in a letter to Salesforce employees. “With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10%, mostly over the coming weeks.”

“I’ve been thinking a lot about how we came to this moment,” he added. “As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”

Salesforce shares were marked 1.8% higher in pre-market trading to indicate an opening bell price of $137.20 each.

Last month, Benioff was left as stand-alone CEO of the San Francisco-based group after Bret Taylor said he would leave the company just a year after becoming co-CEO.

Taylor’s departure cast a pall over an otherwise solid third quarter earnings release for Salesforce, which reported a Street-beating bottom line of $1.40 per share as demand for its work-flow solutions remained solid. Group revenues, Salesforce said, rose 14% from last year to $7.84 billion, essentially matching analysts’ estimates.

The group’s remaining performance obligation, or RPO, a tally of its total deferred revenue and product backlog and a key industry metric, rose 11% from last year to $20.9 billion.

Salesforce repeated its forecast for full-year revenues in the region of $30.9 to $31.00 billion with non-GAAP earnings are expected to come in between $4.92 to $4.94 per share, a 19 cent bump from its August forecast.

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Business Insider 

Microsoft recognized its first union in the US, formed by workers at one of its video game subsidiaries ZeniMax Studios.

SOPA Images / Contributor/ Getty Images

Microsoft recognized its first US labor union, the Communications Workers of America said, Tuesday.
Around 300 workers at Microsoft subsidiary ZeniMax Studios voted to unionize in December. 
Microsoft said it respected its employees “legal right” to form or join a union, last year. 

Microsoft recognized its first labor union in the US, after an overwhelming majority of video game testers at ZeniMax Studios voted to unionize, the Communications Workers of America union announced on Tuesday. 

Around 300 software testers across four of ZeniMax’s locations in Maryland and Texas voted to unionize, according to Reuters. 

ZeniMax is a video game production company popular for its games like The Elder Scrolls and DOOM, and was acquired by Microsoft for $7.5 billion in March 2021. 

Workers at the Microsoft subsidiary had been organizing for months and began signing union authorization cards in November 2022. The official voting process commenced on December 2 through a confidential online portal, and closed on December 31. 

“We want to put an end to sudden periods of crunch, unfair pay, and lack of growth opportunities within the company. Our union will push for truly competitive pay, better communication between management and workers, a clear path for those that want to progress their career, and more,” Victoria Banos, a senior quality assurance audio tester at ZeniMax said in the CWA release. 

Microsoft agreed to voluntarily recognize the union if workers voted to unionize in December, per Reuters. This was a first for the company in the US. 

“Other video game and tech giants have made a conscious choice to attack, undermine, and demoralize their own employees when they join together to form a union,” CWA president Chris Shelton said in the release. 

“Microsoft is charting a different course which will strengthen its corporate culture and ability to serve its customers and should serve as a model for the industry and as a blueprint for regulators.”

Microsoft said it respected its employee’s “legal right to choose whether to join or form a union,” in 2022 after quality assurance workers at Activision Blizzard formed a union. Microsoft was acquiring Activision in a $69 billion deal at the time. 

Companies often opt to voluntarily recognize unions to avoid legal trouble. Union workers can petition to the National Labor Relations Board to force their employer to recognize their union, but the process is long and arduous. 

Microsoft and ZeniMax Studios did not immediately respond to Insider’s request for comment.

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Business Insider 

Viking’s Orion cruise ship was barred from entering several ports because of the growth on its hull.

Photo by Osman URAS/Anadolu Agency via Getty Images

Hundreds of passengers who traveled on Viking Cruises’ Orion cruise ship are set to be compensated.
Passengers missed several stops due to a “marine growth” on the ship’s hull.
Viking Cruises said guests will receive a voucher equal to what they had paid, per Reuters. 

Hundreds of passengers who traveled on Viking Cruises’ Orion ship have been offered compensation in the form of vouchers after they were forced to miss several stops.

The cruise ship, which set sail on Boxing Day, had been due to stop at nine ports around New Zealand and Australia, per Reuters.

However, the ship was turned away from four ports, and passengers were instead forced to stay on board due to a “marine growth” on the ship’s hull, Insider reported.

The vessel had amassed plants, algae, and microorganisms known as biofoul, on its hull. This needed to be removed before the ship was allowed to dock or enter Australian waters.

In a statement shared with Reuters, Viking Cruises confirmed that guests would receive a voucher equal to the cost of the cruise to use on future voyages.

At the time of the incident, passengers on board the cruise took to social media to complain about the journey. 

One passenger wrote on Twitter: “People are livid. Thank you @VikingCruises for a horrible journey. Another day sitting at sea where 2 boats are cleaning the ship hull. Negligence plus.”

Another passenger described the cruise as a “trip from hell.”

She said: “It’s been the most surreal and enraging experience. I guessed this morning before they announced it that we’d be missing yet another port. Now, I just want to get off this ship and go home.”

Representatives for Viking Cruises did not immediately respond to Insider’s request for comment.

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