Microsoft’s sales got a big boost from its acquisition of Nokia’s mobile phone business. Its profits were less fortunate.
On Tuesday, Microsoft reported that its revenue rose 18 percent in large part because it added almost US$2 billion in revenue from Nokia, which officially joined the company a few months ago.
However, at the same time, Nokia, struggling in the competitive mobile business against more successful competitors like Apple and Samsung, dragged down Microsoft’s overall profits.
For the company’s fiscal fourth quarter, which ended on June 30, Microsoft reported a net income of US$4.61 billion, or US$0.55 a share, down from US$4.97 billion, or US$0.59 a share, in the same period a year ago.
The company said revenue jumped to US$23.38 billion from US$19.9 billion in the period a year earlier.
Although Microsoft’s profit was lower, investors have been expecting the addition of Nokia’s money-losing phone business to hurt Microsoft for some time. Microsoft said Nokia lowered its overall operating income by US$692 million during the quarter.
Analysts were expecting Microsoft to report US$0.60 a share in earnings and revenue of US$23 billion, according to an average of their estimates by Thomson Reuters. Microsoft’s shares rose slightly in after-hours trading after the release of the results.
Investors appeared to take some comfort from the progress of Microsoft’s cloud business, a major part of its effort to reposition its business for the future.
Microsoft said its commercial cloud revenue doubled during the last fiscal year from the year before and is now on track to be a multibillion dollar annual business.
In the past few weeks, new Microsoft chief executive Satya Nadella has been putting his stamp on the company, first with a manifesto that sought to rally employees around what he views as Microsoft’s core mission as “the productivity and platform company for the mobile-first and cloud-first world.”
Since then, people inside and outside Microsoft have been waiting for Nadella to translate his message into specifics.
An important development came last week when Microsoft announced plans to eliminate about 18,000 jobs at the company over the next year, or about 14 percent of its total work force. The layoffs fell most heavily on the 25,000 employees who joined Microsoft a few months ago after the closing of its deal to acquire Nokia’s mobile business.
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