Microsoft Posts Record Loss as it Writes Down Nokia

Microsoft recently wrapped up its most recent financial quarter and reported earnings that indicate promise for cloud, concern for its Devices and Consumer division, and reliance on Windows 10 for a successful 2016.


Software giant Microsoft has incurred losses of US$2.05bn on fourth quarter revenues of US$22bn which the company attributed to the costs associated with the US$7.5bn write-down for its acquisition of Nokia Devices as well as restructuring charges of US$780m.

Chief executive Satya Nadella has been moving to establish subscription revenues for Microsoft products and to boost its cloud computing efforts with Windows lagging in mobile devices.

Although Microsoft is expected to launch Windows 10 Mobile in September, it’s unlikely the operating system will help dig the company out of such a massive hole in terms of public perception and consumer adoption.

Microsoft made a quarter less revenue with sales of Windows licenses the last quarter compared to the year before.

Commercial revenue increased slightly to United States dollars 13.5 billion, led by strong demand for cloud products such as Office 365, Azure and Dynamics CRM Online.

The hefty write-down was expected after the company two weeks ago announced 7,800 job cuts globally, primarily in the phone business it acquired past year. However, the charges related to the Nokia Devices and Services (NDS) business and restructuring ended up being larger than Microsoft indicated earlier in the month.

While Wall Street was expecting earnings of $0.56 share on revenue of $22.06 billion without the Nokia intereference, Microsoft would have returned $0.62 .62 a share on revenue of $22.18 billion. Phone hardware revenue fell 38% to US$1.23 billion as the focus shifted away from flagship products, while revenue generated by the Windows Phone operating system was down 68% due to lower royalty payments.

But the company also beat out Wall Street expectations in revenue and earnings.

Search advertising revenue rose 21 per cent with Bing United States market share at 20.3 per cent, up 110 basis points over the prior year.

Windows 10 lands next week and Microsoft is hoping the new OS ushers in a Windows as a service business model. Cloud services were up 88 percent, with an annualized run rate now of over $8 billion (£5.1 billion). The strong growth in consoles, Xbox Live transactions and first party games brought 27% growth in Xbox revenue as well.


Microsoft sold 8.4 million Lumia smartphones. Windows volume licensing revenue declined 8 per cent, or 4 per cent excluding the impact of foreign-exchange rates.

Another budget-friendly Lumia (model number RM-1130) spotted at GFXBench