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Microsoft posts record loss
With the charges, Microsoft lost $3.2 billion, or 40 cents a share.
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Microsoft also took restructuring charges of almost a billion dollars as part of the move, which included some 7,800 job cuts worldwide. The write-down of the troubled Nokia’s cellphone business might be a big blow, but not expected to diminish the company’s huge cash board. Microsoft’s sales of phone hardware grew, but revenue from Lumia smartphones declined because of increased sales of cheaper devices. Nevertheless, the company is growing in the areas where the future of Microsoft lies.
The cloud was also kind to Microsoft.
Microsoft, deep in a transition to cloud computing, late Tuesday reported better-than-expected earnings for its fiscal Q4, but year-over-year revenue fell for only the second quarter in at least four years.
On a group level, revenue declined 5.1 per cent to $22.18 billion.
Microsoft shares fell as low as $45.28 in extended trading following the report after closing at $47.28. Analysts see the new phones as Nokia’s last chance to compete with fellow technology companies Apple and Samsung in the lucrative smartphone market.
Analysts agree that investing in cloud and Windows 10 makes strategic sense, but some say the rationale behind pouring more money into hardware is less clear. One-time rival Microsoft, which reported its highest-ever net loss for the quarter after writing off billions for the failure of its Nokia handset division, and witnessing plummeting demand for PCs.
Microsoft’s biggest challenge is a PC market left limping by the rise of mobile devices.
Office 365 adoption, at some 1 million new subscribers every month, adding to 15 million current subscribers, is a major driver of that cloud expansion, Nadella said. Most of the profit of the company comes from sales of MS Office, Windows and other products.
However, sales of Windows and Office software, which accounted for most of the company’s business in the past, continued to struggle, with revenue in the division falling 22% year-on-year.
Digital Trends said the Windows 10 for mobile will allow users to browse and buy applications through a new application store.
Excluding items, the company earned 62 cents per share. Xbox revenue alone is up 27 percent.
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Revenue from Microsoft’s overall commercial cloud business grew 88 per cent during the quarter, one of the brightest spots in its results. The company is believed to be changing its strategy towards the mobile front; the tech giant will now be launching two to three devices per year, which will cater to each of the different segments the company plans to target.