The writedown was an acknowledgment that the Nokia deal had lost nearly all its value after failing to rescue the company’s smartphone business.
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The record net loss for Microsoft is due to the writing down of its Nokia phone business and poor demand for its Windows operating system.
Revenues from Microsoft’s Lumia and non-Lumia units plunged, which the tech giant attributes to declining volumes and lower-priced gadgets in the global market. Theyre still progressing but people would like them to move faster. In last year’s fourth fiscal quarter, Microsoft posted net earnings of 55 cents per share. Excluding currency impacts, revenue dropped 2%.
Microsoft shares were down in after-hours trading. The shares rose 8.6 percent in the quarter, while the Standard & Poor’s 500 Index fell less than 1 percent.
Phone Hardware was down 37.7 per cent in Q4, with $1.23bn in revenue. Sales in the phone business are expected to continue to show “significant” year-on-year declines, while losses should start to reduce as the recently announced restructuring takes effect.
Microsoft also said it was hit by the strengthening of the USA dollar compared to foreign currencies.
“You will see improving results on the bottom line”, she said of the mobile business. Company shares that “these items totaled $8.4 billion or a $1.02 per share negative impact”.
“While the PC ecosystem has been under pressure recently, I do believe that Windows 10 will broaden our economic opportunities and return Windows to growth”, Nadella said. The OS, a successor to the fairly unsuccessful Windows 8, is expected to boost sales of Windows to computer manufacturers.
“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. We should remember, however, that Microsoft’s acquisition of Nokia’s Devices and Services business didn’t close until April 2014, so the numbers are a little skewed.
It’s a stark contrast to Microsoft’s a href=”http://venturebeat.com/2015/04/23/microsoft-beats-in-q3-2015-with-revenue-of-21-7b-eps-of-0-61-and-surface-revenue-of-713m/”>past four quarters, when the company has either met or beat expectations. Up 88 percent, Microsoft’s commercial cloud revenue accounted for the majority of its commercial earnings. The Surface Pro 3 and Surface 3 launched in June of last year and May of this year respectively. The company has tried to adjust to that new reality partly by transitioning its traditional software franchises, like Office, to become cloud services that customers subscribe to rather than purchase outright.
Devices and consumer revenue declined 13 percent to $8.7 billion, with Windows OEM revenue plunging 22 percent, largely hurt by PC market declines. In licensing we expect revenue to be $3.4 to $3.6 billion.
The average estimate among 122 Estimize users was for earnings of $0.54 per share and revenue of $22.42 billion.
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-With assistance from Beth Mellor in New York.
