PC sales are still in the dumps as traditional software sales are losing steam to cloud services, and many venerable technology companies are struggling to leap from the old way of doing things to the new.
However, Microsoft Corp is bucking the trend.
While the company still has much to prove in the mobile phones market, Microsoft on Thursday offered tantalizing signs of progress in the transformation of its business.
Last quarter, the company had a 25 percent increase in sales, largely because of its acquisition of Nokia Oyj’s mobile phone business.
“Overall, what we are seeing is the increasing competitiveness of our products,” Microsoft chief executive officer Satya Nadella said in a conference call with analysts.
For the three months that ended on Sept. 30, Microsoft’s fiscal first quarter, the company said its net income was US$4.54 billion, or US$0.54 a share, compared with US$5.24 billion, or US$0.62 a share, a year ago.
The average estimate of analysts surveyed by Thomson Reuters was US$0.49 a share for the period and US$22.02 billion in revenue.
The dip in profit was largely the result of US$1.14 billion in costs associated with the company’s acquisition of Nokia’s mobile phone business.
Without that expense, Microsoft would have reported earnings of US$0.65 a share.
In July, Microsoft announced plans to reduce costs by laying off up to 18,000 employees, or about 14 percent of its global workforce, by the end of June next year.
Most of the cuts are related to the company’s Nokia acquisition.
The results impressed investors, especially when compared with weak results from other technology bellwethers like IBM.
“I thought these were stellar numbers in a choppy IT spending environment,” FBR Capital Markets analyst Daniel Ives said.
Microsoft shares on Thursday climbed 3 percent in after-hours trading.
Microsoft has struggled to find its footing in recent years as the PC and traditional software businesses have shown signs of weakness and newer technologies, such as mobile and cloud computing, have surged.
The addition of Nokia to its business added US$2.6 billion in phone hardware revenue that did not exist for Microsoft during the year-earlier period.
Without that boost, Microsoft’s revenue would have grown 11 percent in the quarter.
Microsoft said that it sold 9.3 million of its Lumia smartphones in the quarter, representing what it called modest growth from a year earlier.
“We have work to do on phones,” Microsoft chief financial officer Amy Hood said in a phone interview.
However, Microsoft’s cloud business is showing signs of strength that have encouraged investors.
During the quarter, the company said its commercial cloud revenue grew 128 percent during the quarter from a year ago.
Microsoft’s commercial revenue, of which its corporate cloud business is a part, grew 10 percent to US$12.28 billion.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)