Microsoft hit by biggest-ever quarterly loss

July 22, 2015 | 11:35

Tags: #financial #satya-nadella #windows-10 #windows-mobile #windows-phone

Companies: #microsoft #nokia

Microsoft has released its latest quarterly earnings report, and it makes for painful reading: the aftermath of its acquisition of Nokia has led to its biggest loss in history.

On the face of it, there's plenty for Microsoft to celebrate as it closes its fourth quarter of the 2015 financial year: revenue from its Surface division jumped 117 per cent to $888 million thanks to the launch of the Surface 3, its Xbox revenue is up 27 per cent, search-based advertising revenue is up 21 per cent with 20.3 per cent market share, and revenue from its commercial cloud product lines is up 88 per cent. Sadly, these growths couldn't hide the company's past mistakes: a $7.5 billion non-cash impairment charge for assets associated with its acquisition of Nokia's mobile division hit the company's bottom-line hard, leading to a $2.1 billion loss for the quarter - the biggest in the company's history.

The figures weren't helped by the continuing slowdown in the global PC market, which contributed to a 22 per cent decline in revenue from its Windows OEM sales, and a four per cent drop in Office sales. Even businesses, traditionally a serious cash-cow for the company, have been shying away from upgrades and purchases, with Windows volume licensing dropping eight per cent - thanks, Microsoft claims, to the boost given by Windows XP reaching official end-of-life now slackening off.

'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,' claimed Satya Nadella, chief executive officer, of Microsoft's results. 'And the upcoming release of Windows 10 will create new opportunities for Microsoft and our ecosystem.'

With Microsoft's mobile range still struggling to gain market share and a $7.5 billion write-off pushing the books into the red, it's hard to see the company's Nokia acquisition as anything other than a terrible mistake. The company has, however, pledged to plough on, stating that it has no intention to leave the mobile market in the near future and making convergence a major string in its Windows 10 bow.
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