Innovation
Microsoft said Tuesday that its quarterly profit fell 7.1%
By Finfacts Team
Jul 23, 2014 - 11:22 AM

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Microsoft said Tuesday that its quarterly profit fell 7.1% as the company had to book a loss from acquiring Nokia's money-losing mobile business.

Last week Satya Nadella, Microsoft CEO, announced 18,000 jobs cuts in the next year, or about 14% of the company's workforce, mainly to rationalise Nokia businesses.

Microsoft said revenue from phone sales from Nokia business was $1.99bn, while the operating loss was $692m.

The negative impact from Nokia overshadowed continued strong performance from sales of Windows, Office and other software to companies. Revenue from what Microsoft calls total commercial sales rose 11% to $13.48bn.

The software giant announced revenue of $23.38bn for the quarter ended June 30, 2014. Gross margin, operating income, and diluted earnings per share (EPS) for the quarter were $15.79bn, $6.48bn, and $0.55 per share, respectively.

Microsoft said: "One of the most striking things in Tuesday’s earnings report is the continued rapid growth of Microsoft’s cloud services. Our commercial cloud revenue increased by 147 percent over the comparable quarter last year, driven by strong growth in Office 365, Azure, Dynamics CRM and other commercial cloud services.

The commercial cloud annual revenue run rate has basically doubled each of the past two years, and now stands at $4.4bn and is climbing rapidly.

Doubling a billion-dollar business in a single year is hard. Doing it two years in a row means Microsoft is providing terrific value to our customers."

The Wall Street Journal said Microsoft sells fewer than 5% of all new smartphones purchased world-wide. The company said Thursday that it sold about 5.8m Nokia smartphones since it acquired Nokia's handset business in April. By comparison, rival Apple Inc. sold 35.2m iPhones in the three months ended June 28.

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