Is Microsoft Stock in Trouble After Cutting Guidance?

Microsoft (NASDAQ: MSFT) shares fell on Thursday after the software giant updated its financial guidance for its fiscal fourth quarter ending June 30. The tech pioneer disclosed that it would have to reduce its expectations for the quarter, and the cause was one that could become a lot more common when earnings season kicks into full gear in July.

Microsoft based its warning on changes in foreign exchange rates between the beginning of the quarter and the end of May. In particular, as the U.S. dollar has strengthened against major foreign currencies, companies that do considerable amounts of business abroad face the difficult choice of either raising prices in international markets or suffering declines in dollar-based revenue and profits. Microsoft has apparently chosen the latter course, and investors need to consider the ramifications not just for the software company, but for every business in a similar situation.

Image source: Getty Images.

Source Fool.com