Microsoft sees $3.19b loss on Nokia writedown

The net loss in the fourth quarter, which ended June 30, amounted to $3.2 billion, and revenue fell 5.1 percent to $22.2 billion, Microsoft said Tuesday in a statement. Microsoft’s shares plummeted 3.9% to $45 after four hours of trading yesterday.


Satya Nadella, CEO of Microsoft, said in a conference call that “the big shift that we are making when it comes to phones is to not think about phones in isolation”, instead with the planned shift to Windows 10 meaning it is looking at “the Windows ecosystem in its entirety”.

Revenue from versions of Windows bundled with PCs tumbled by 22 percent, which Microsoft attributed to the end of Windows XP support.

Microsoft’s cloud business on the other hand, which includes Office 365 and Azure, rose 96%.

The company announced plans to cut nearly 8,000 jobs earlier this month, alongside the impairment charge on the ailing devices business. The Nokia phone business was acquired by Microsoft in a $7.2 billion deal in April 2014.

Microsoft had hit $0.62 per share thereby outdoing the expectations on the earnings and revenues per share that were exclusive of the write downs.

Compared to the previous fiscal year 2014, the fourth quarter of the year has a 3 percent decrease in overall income while improving the earnings per share by 11 percent over last year.

Apple has reported today that they made $11 billion in profit over the last three months. As a result, the company cut operating expense forecasts for the year to $32.1 billion to $32.4 billion.

Microsoft is going through a transition under Nadella’s leadership, as its changing the way it does business as seen with the forthcoming launch of Windows 10. And unlike its catastrophic foray into the mobile business, its cloud services numbers would definitely bolster investor relations and find new customers. The events leading up to this quarter’s loss may have bloodied Microsoft, but one has to imagine that employees who remain are breathing a collective sigh of relief.


As a result of these products, its cloud revenue run rate exceeded $8 billion. In reality Microsoft has sold 10% more Lumia phones than a year ago. In the meanwhile, you’ll at least have the opportunity to stream Xbox One games to a Windows 10-equipped PC thanks to the new OS’s Xbox app, so there’s that. The company also saw growth in sales of its Xbox game consoles, and boosted revenues from its Bing search engine.

Phil Spencer head of Microsoft’s Xbox Division