Microsoft Results A Shocker, Sales Down 5.1%, Loss Reported $4.1 Billion
The Company who has been hurt by poor consumer software sales, a fall in demand for their Xbox in Europe declining PC sales and a total lack of demand for a Windows Smartphone.
Analysts ahead of the earnings report said that they weren’t expecting the new Windows 10 which Microsoft claims that they are giving away for free because of a lack of demand for their Windows 8 software, will do much to boost weak sales trends for personal computers.
The big US software Company said its revenue fell 5.1% in its latest quarter, they also posted its biggest quarterly loss ever on a hefty write-down and other items related to the Nokia mobile-phone business acquired last year.
For the period ended June 30, revenue decreased to US$22.18 billion from US$23.38 billion a year earlier.
Microsoft’s Windows smartphones have a tiny share of the smartphone market, which is dominated by market leader Apple’s iPhone.
Earlier this month Microsoft said it was writing down about 80% of the US$9.4 billion deal for Nokia’s handset business and that it would cut more than 6% of its global workforce–mostly in its mobile-phone operation–a year after an earlier round of job cuts to the business.
Overall, Microsoft reported a loss of $4.1 billion, or 40 cents a share, compared with a year-earlier profit of US$4.61 billion, or 55 cents a share. Excluding the write-down, restructuring charges and other items, per-share earnings were 62 cents. Analysts expected per-share profit of 56 cents.
Investors likely will be interested in what Chief Executive Satya Nadella’s has to say on the conference call about the strategy for turning Microsoft’s mobile business around.
Microsoft has shifted focus away from PCs and toward cloud services since Satya Nadella took helm as CEO last year. Revenue for Microsoft’s commercial cloud computing-a crucial segment that includes Office 365 and Azure-grew 88 percent year-over-year. It has hit an annualized revenue run rate of more than $8 billion, the company said.
“Our approach to investing in areas where we have differentiation and opportunity is paying off with Surface, Xbox, Bing, Office 365, Azure and Dynamics CRM Online all growing by at least double-digits,” said Nadella in a statement.