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Microsoft´s Q2 canned by Nokia write-off

by on22 July 2015

Worst quarter result in ages

Microsoft presented an awful financial report for its fiscal fourth quarter which showed its Nokia right off and poor software sales.

Redmond reported a $3.2 billion quarterly loss, a departure for a company that typically creates reliable profit. The loss resulted from $8.4 billion in previously announced charges and layoffs in the company’s struggling mobile-phone operation, which Microsoft bought last year from Nokia.

Microsoft Chief Executive Satya Nadella said that beyond the mobile carnage, results for the three months ended June 30 were better than analysts had expected.

However sales growth came from less-profitable areas.

Revenue was strong from some products targeted largely at the consumer market. Sales of the Surface tablet, for instance, more than doubled from a year earlier to $888 million, and sales of Xbox game consoles and associated videogame revenue rose 27per cent. But that wasn’t enough to create increases in consumer divisions in total, as revenue fell 13 per cent.

Windows revenue took a hit as fewer people bought new personal computers and sales sagged before the release of Windows 10.

For the first time in the company’s history, Microsoft is letting many people with existing computers upgrade to the latest Windows free. To make up the lost revenue, the company is counting on selling those customers add-ons like PC videogames, Office and Web-search ads. This will be a test for Microsoft, which historically hasn’t been successful selling add-on services to consumer PC users.

Most of Microsoft’s profit comes from sales of Windows, Office, databases and other corporate software. Total sales of those and other products sold to businesses rose 0.2 per cent to $13.53 billion in the fourth quarter—the slowest growth pace in at least two years.

Microsoft’s closely watched “cloud” software business, including Web-friendly versions of Office for businesses and the Azure computing service did ok. Cloud software sales rose 88 per cent from a year ago, but those big gains represent a slowdown from prior quarters’ greater-than-100 per cent growth rates.

Overall in the quarter, Microsoft’s loss came to $3.2 billion compared with a year earlier net income of $4.6 billion, or 55 cents a share.

Revenue fell 5.1 per cent to $22.18 billion. Analysts expected revenue of $22.03 billion.

Last modified on 22 July 2015
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