Microsoft's Profit Takes Hit on Nokia
Microsoft Corp. MSFT -0.01% said its quarterly profit declined 7.1% as the company absorbed a financial hit from acquiring Nokia Corp.'s NOK1V.HE +0.88% money-losing cellphone business.
The earnings scorecard comes just days after CEO Satya Nadella said Microsoft would cut up to 18,000 jobs in the next year, or about 14% of the company's workforce, largely to clear up overlap with the Nokia businesses and ease its drag on profits.
Microsoft said revenue from phone sales from the acquired Nokia business was $1.99 billion, while the operating loss was $692 million.
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 $13.48 billion.
Such products—which include email and word processing tools, various programs for servers and other corporate technology—generate the majority of Microsoft's gross profit.
In all, Microsoft's net income totaled $4.61 billion, or 55 cents a share, for the fiscal fourth quarter ended June 30, compared with $4.97 billion, or 59 cents a share, in the year-earlier quarter. Revenue rose 18% to $23.38 billion.
Analysts, on average, had estimated Microsoft would post earnings of 60 cents a share on revenue of $23 billion, according to Thomson Reuters. However, Wall Street estimates varied sharply because of uncertainties associated with the Nokia business, which was acquired in April.
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