Microsoft Earnings Are History Low

Microsoft Earnings Are History Low
Picture from Microsoft/Microsoft Website

Microsoft Corporation has just announced their earnings for their fourth quarter for fiscal year 2015. The quarter that ended last June 30 earned a revenue of $22.2 billion. During the Microsoft Earnings conference call, Microsoft Chief Executive Officer Satya Nadella also stated that Microsoft’s total revenue has grown to $93.6 billion this year, reflecting an 8% increase year over year.


Meanwhile, the company also reported an operating loss of $2.1 billion and a loss per share of $0.40. Bloomberg reports that this is the largest quarterly loss Microsoft has ever reported.

The said results are said to be the effect of the $7.5 billion non-cash impairment charge that the company had undertaken with regard to its earlier acquisition of Nokia Devices and Services (NDS) business, which also led to company to lay off some 7,800 workers.

Microsoft Corporation has also accrued a restructuring charge of $780 million as well as a charge of $160 million with regard to the company’s integration and restructuring plan. In total, all charges amount to $8.4 billion, which translates to a per share negative impact of $1.02. Without this, Microsoft says that the company’s operating income would have been $6.4 billion while it’s earnings per share would have $0.62.

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During call, Nadella also said, “We pushed forward in our transformation by focusing our investments in areas where we have differentiation and significant opportunity for future growth in large addressable markets.We galvanized around our mission, strategy, and ambitions. We aligned our structure with our strategy to deliver better products at a more rapid pace. We focused our advertising business on search. We focused our mapping efforts on higher level experiences and developer services. We restructured our phone portfolio so that we can operate more efficiently near-term while driving reinvention long term. We invested more in new mobile applications like Wunderlist, Accompli and Sunrise. We also strengthened our enterprise cloud platform by acquiring Revolution Analytics, Datazen, and Bluestripe in this quarter alone… And, we’re at the threshold of the Windows 10 launch.”

Moreover, he added, “I’m proud of these steps. And, I’m proud of the results we delivered in tandem.”

Microsoft revenue for its Device and Consumer segment went down by 13% to $8.7 billion. Nonetheless, revenue for Surface increased by 117% to $888 million due to Surface Pro 3 and the launch of the Surface 3. In addition, revenue for Xbox also increased by 27%. Also, revenue for search advertising increased by 21% as Bing reached up to 20.3% of the US market share.

Meanwhile, commercial revenue also slightly increased by 4% to $13.5 billion. Commercial cloud revenue, in particular, increased by as much as 88% due to Office 365, Azure and Dynamics CRM online.

Nadella explained, “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. And the upcoming release of Windows 10 will create new opportunities for Microsoft and our ecosystem.”

As for its outlook for the first quarter of fiscal year 2016, Microsoft expects its revenue for phone hardware to be around $900 million. On the other hand revenue for Device and Consumer licensing is projected at $3.4 to $3.6 billion while revenue for commercial licensing is expected to be between $9.1 and $9.2 billion.