Microsoft Corporation’s Q4 earnings significantly drops because of the $7.5 billion accounting charge resulting from its acquisition of Nokia’s mobile phone business.
“Gross margin, operating loss, and loss per share for the quarter were $14.7 billion, $(2.1) billion, and $(0.40) per share, respectively”, company officials announced.
Microsoft is pushing hard to get businesses to use its Azure Cloud platform, but CEO Satya Nadella says that the company hasn’t given up on its products tailored for companies that still have on-premises data centers.
Redmond, Wash. – Dollar sales of Microsoft’s Surface tablets more than doubled in the company’s fiscal fourth quarter and grew 65 percent for the year, while Xbox console revenues rose 30 percent in the quarter, Microsoft reported. The company is on the verge of launching its newest operating system Windows 10 on July 29.
In addition to taking the write-down for Nokia, Microsoft said it would cut 7,800 jobs to restructure its smartphone business. The company had posted net income of US$4.61 billion, or 55 cents per share, a year earlier.
During the period, Microsoft also had to eat a charge of $160 million related to a previously announced integration and restructuring plan.
However, revenues for the full year to the end of June were nevertheless up by eight per cent, from $86.8 billion to $93.6 billion, buoyed through much of the year by the spike stimulated by the Windows XP end-of-support upgrade rush.
Cloud services are a critical part of Microsoft’s turnaround strategy. “And the upcoming release of Windows 10 will create new opportunities for Microsoft and our ecosystem”, he said.
Windows Phone revenue fell 68 percent to $552 million, mainly because of $382 million in revenue recognized in the previous year when the company’s commercial agreement with Nokia ended.
Next week marks the official launch of Windows 10, the next major update to Microsoft’s operating system.
“The Street continues to be wary of what Windows 10 can bring in terms of a growth profile back to the Microsoft story”, Ives said. In our pre-earnings note, we noted that hardware sales and cloud services would boost revenues.
On the other hand, Microsoft’s revenue from its highly popular Windows, likewise suffered huge declines, falling 25 percent in the midst of a weakening personal computer market.