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Microsoft writes off Nokia’s phone h/w biz; $3.19B loss in Q4 FY15

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Microsoft has reported a loss of $3.19 billion for the quarter ended June 30th, 2015, a decrease of 169% from $4.61 billion in profits the same quarter last year. The total revenues for the quarter also declined to $22.18 billion from $23.38 billion in the corresponding quarter last year. The operating income for the company also reported a loss of $2.05 billion, a decline of 131.63% from a profit of $6.48 billion in the same quarter last year.

The loss reported is mostly due to the write off of Nokia’s $7.5 billion phone hardware business and $780 million of restructuring expenses. The company mentioned that there was an additional charge of $160 million related to an integration and restructuring plan announced prior to this one.

Highlights:

Devices and consumers licensing revenues declined 34% to $3.23 billion for the quarter, down from $4.90 billion in the same quarter last year. The decline was mainly due to the end-of-support for Windows XP and end of Nokia’s commercial agreement in the previous year.

Windows OEM revenues declined by 22% while Windows Phone revenues declined by 68%. Office consumer revenues also declined by 42% as users transitioned to the subscription based Office 365 instead of outright purchasing Office.

– Microsoft’s Computing and Gaming hardware business generated $1.93 billion in revenues, up 44% from $1.24 billion in the same quarter last year. The revenue growth was driven by the company’s newly launched Surface 3 tab, which generated revenues of $888 million.

Xbox console sales also grew by over 30% to 1.4 million units, with revenues for the platform up by 10%. The company mentions that the gross margins on its products has exceeded 20% for the past two quarters, a trend it expects to continue.

– Microsoft sold 8.4 million Lumia smartphones over the quarter, a growth of over 10% from the corresponding quarter last year. However, the revenues from Lumia smartphones declined due to price reductions. Additionally, the company sold 19.4 million non-Lumia feature phones, although this market saw a decline as well. Overall, the company’s Phone Hardware department reported revenues of $1.23 billion, down 38% from $1.98 billion in the same quarter last year.

Other Device and Consumer businesses, including resale, online advertising, first party games and office 365 consumers, reported revenues of $2.30 billion for the quarter, up 31% from $1.76 billion in the same quarter last year. Revenues for games were up by 62% mostly due to Minecraft, while Office 365 subscribers grew to 15.2 million, up by 3 million from the previous quarter.

– Microsoft’s commercial segments reported revenues of $13.53 billion, holding steady from $13.5 billion in the same quarter last year. The company mentions its commercial cloud also grew by 88%, with an annual revenue run rate of over $8 billion.

Download: Press Release | Slides

Also read:

Microsoft sells most of its advertising business to AOL

Microsoft sells part of Bing mapping tech to Uber

Microsoft to release Windows 10 by the end of July

Microsoft Build: Cross-platform apps, Office as a platform, IoT and virtual reality

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