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Microsoft posts record $3.2 billion loss as it writes down Nokia
Microsoft Corporation’s Q4 earnings significantly drops because of the $7.5 billion accounting charge resulting from its acquisition of Nokia’s mobile phone business.
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Shares of Microsoft fell sharply Wednesday after the company posted the largest quarterly loss in its history, $3.2 billion, during its fourth quarter earnings call the previous day. Microsoft is also launching the Windows 10 operating system later this month, which the company believes will be far more popular than its current option, Windows 8.1.
Devices and consumer revenue declined 13 percent to $8.7 billion, with Windows OEM revenue plunging 22 percent, largely hurt by PC market declines.
Commercial cloud revenue grew 88% driven by Office 365, Azure and Dynamics CRM Online and is now on an annualized revenue run rate of over $8 billion. 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.
Excluding those charges, the company reported earnings per share of 62 cents, which beat the 56-cent consensus estimate from analysts polled by Thomson Reuters.
Cellphones: Overall phone-hardware revenue fell 38 percent to $1.23 billion in the quarter because of revenue declines in Windows Phone smartphones and non-Lumia feature phones.
However, Microsoft’s shares slipped over 2 percent in the after-hours trade following the announcement. (NASDAQ:AAPL)’s Mac and iPad business generating more than $5 billion each in the last quarter, it’s a clear indication that Microsoft is miles behind Apple in this sector.
Next week marks the official launch of Windows 10, the next major update to Microsoft’s operating system.
With their expected release on the last quarter of the year, the public is curious on what they could expect from these two devices.
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Nadella pointed in part to new machines from computer makers that will be released in conjunction with Windows 10 this year. As mentioned by the report, the company has seen a growth of 27% in its Xbox revenue credited to “strong console sales”, along with Xbox live transactions and sales of game titles it has produced in-house. Microsoft’s computing and gaming hardware revenues improved by 50% (in constant currency), primarily due to 117% improvement in Surface 3 revenues to $888 million.