by Staff Writers
New York (AFP) July 22, 2014
Microsoft said Tuesday 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 Satya Nadella said 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 percent from a year earlier to $4.6 billion, below market expectations.
But revenues grew a strong 17.5 percent, lifted by the cloud services.
"We are galvanized 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," said Nadella.
"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."
The earnings came just days after Microsoft announced its biggest job cuts ever with Nadella calling for a new focus at the US tech giant while integrating the Nokia phone division acquired this year.
The company said 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 percent of Microsoft's global payroll of some 127,000. The company will take a charge of between $1.1 billion and $1.6 billion for costs related to the layoffs.
In the latest earnings, Microsoft said revenues from its Windows division rose three percent from a year ago, in a sign of some stabilization in the PC market and upgrades to devices with the newer operating systems.
The company saw a 40 percent 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 to revenues but dragged on profits, the company said.
The Nokia unit subtracted some $692 million from the Microsoft's bottom line, the company said.
Paul Ausick at 24/7 Wall Street said Microsoft remains dependent on Windows despite claims to the contrary.
"Microsoft's results continue to depend on Windows which in itself is no surprise. What is surprising is how hard it is for Microsoft to make any significant change in its dependence on Windows," he said in a blog post.
Despite the weaker profit, investors appeared encouraged by the increase in revenues. Shares in Microsoft gained 0.2 percent to $44.93 in electronic trading after the results.
Raimo Lenschow, analyst at Barclays, said Microsoft's enterprise strategy "is gaining significant traction"
The company "had another solid quarter in the enterprise, as execution remains solid with customers buying into Microsoft's portfolio of enterprise solutions," he said in a note to clients.
Microsoft completed its takeover of Nokia's phone unit in April in a move that strengthened its position in mobile devices. The cost was around $7.5 billion.
Nadella, who became CEO earlier this year, is seeking to reinvigorate a company that had been the world's largest but which has lagged in recent years as Google and Apple have taken leadership of the tech sector.
Satellite-based Internet technologies
|The content herein, unless otherwise known to be public domain, are Copyright 1995-2014 - Space Media Network. All websites are published in Australia and are solely subject to Australian law and governed by Fair Use principals for news reporting and research purposes. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA news reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement, agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement All images and articles appearing on Space Media Network have been edited or digitally altered in some way. Any requests to remove copyright material will be acted upon in a timely and appropriate manner. Any attempt to extort money from Space Media Network will be ignored and reported to Australian Law Enforcement Agencies as a potential case of financial fraud involving the use of a telephonic carriage device or postal service.|