Nokia phones eat into profits of Microsoft

Microsoft chief executive officer, Mr Satya Nadella. Microsoft has said profits took a hit from its newly-acquired Nokia phone division but that revenues got a strong lift from cloud services. 

In Summary

• The earnings came just days after Microsoft announced its biggest job cuts ever, with Mr Nadella calling for a new focus at the US tech giant, while integrating the Nokia phone division acquired this year.
• The company said that it would slash 18,000 jobs from its global workforce over the next year, the majority from the Nokia handset unit.

By AFP
More by this Author

NEW YORK, Wednesday

Microsoft has said profits took a hit from its newly-acquired Nokia phone division but that revenues got a strong lift from cloud services.

 

The US tech giant’s new chief executive officer, Mr Satya Nadella, said on Tuesday the results suggested that Microsoft’s shift to services amid declining personal computer sales was starting to pay off.

Net profit for the three months ending June 30 dipped seven per cent from a year earlier to $4.6 billion (about Sh405 billion), below market expectations.
However, the tech giant’s revenues grew a strong 17.5 per cent, lifted by the cloud services.

“We are galvanised around our core as a productivity and platform company for the mobile-first and cloud-first world, and we are driving growth with disciplined decisions, bold innovation, and focused execution,” Mr Nadella said.

“I’m proud that our aggressive move to the cloud is paying off — our commercial cloud revenue doubled again this year to a $4.4 billion annual run rate,” he said.

The earnings came just days after Microsoft announced its biggest job cuts ever, with Mr Nadella calling for a new focus at the US tech giant, while integrating the Nokia phone division acquired this year.

The company said that it would slash 18,000 jobs from its global workforce over the next year, the majority from the Nokia handset unit.
The cuts represent about 14 per cent of Microsoft’s global payroll of some 127,000.

Adverts revenue
The company will take a charge of between $1.1 billion (Sh95.7 billion) and $1.6 billion (Sh139.2 billion) for costs related to the layoffs.

In the latest earnings, Microsoft said revenues from its Windows division rose three per cent from a year ago, in a sign of some stabilisation in the PC market and upgrades to devices with newer systems.

The company saw a 40 per cent jump in advertising revenues from its Bing search engine and gains from subscribers to its online Office 365.

The new Nokia phone division acquired this year added some $2 billion (Sh174 billion) to revenues, but dragged on profits, the company said. The Nokia unit subtracted some $692 million (Sh60.2 billion) from Microsoft. (AFP)