Microsoft announces highest net loss in history

22 Jul 2015 | Author: | No comments yet »

Microsoft hit by biggest loss in its history on Nokia smartphones.

As Apple announced iPhone revenue was up 59 per cent over the last year, Microsoft effectively admitted defeat in its bid to become a major player in the mobile phone market. “We had an amazing quarter, with iPhone revenue up 59 per cent over last year,” the company’s chief executive officer Tim Cook said in the earnings release, adding that it had also had a great start for the Apple Watch. Microsoft’s Q4 FY15 earnings may have been dampened by Windows Phone and the Nokia acquisition, but the software major continues to fly high on the cloud front.Microsoft reported a $3.2 billion (€2.9 billion) quarterly net loss, its biggest ever, as the company wrote down its Nokia phone business and demand fell for its Windows operating system. Commercial cloud revenue grew $832 million or 88 percent (up 96 percent in constant currency) driven by Office 365, Azure and Dynamics CRM Online and is now on an annualized revenue run rate of over $8 billion, Microsoft reported in its earnings. Despite the strong results, Apple stock fell by 7 per cent in after-hours trading as it sold fewer iPhones than Wall Street forecast, although it later clawed back some of those losses.

Calling the iPhone 6 “a runaway success” Mr Cook said that the product category is continuing to gain significant market share and that the phone’s growth was triple the rate of the smartphone market overall. And, while reporting the Q4 earnings figures, he said Microsoft remains “on track to achieve our $20 billion commercial cloud ambition in fiscal 2018.” In the commercial space, the number of Office 365 users continues to climb with seats growing 74 percent year over year. “Office 365 is now in four out of five Fortune 500 enterprises, and more than 55 percent of the install base is on premium workloads. It is clear that we have success moving customers to the cloud given half of all enterprise agreement renewals were for Office 365 this quarter,” the company said during investor call. The company is scheduled to roll out Windows 10 on July 29, a much-awaited launch after a lacklustre response to Windows 8. “With the launch next week, we’ve got folks that have already signed up to get it as soon as it is available … it’s an exciting time for us and the ecosystem,” Microsoft director of investor relations Todd McCommon said. Sales of Windows to businesses fell 21 percent from the year-earlier quarter, when demand for the operating system had surged after Microsoft discontinued support for Windows XP.

In addition, Microsoft said small and medium businesses offer “one of our best opportunities for new growth in the cloud.” “For more than a year now we’ve seen 50,000 new SMB customers adopt Office 365 every month.” “Last week at our Worldwide Partner Conference, we announced our new Office 365 premium SKU for businesses, E5. Revenue from Microsoft’s commercial cloud business, which includes offerings such as Office 365 and Azure, rose 96 percent, excluding the impact of a strong dollar. Now our customers will get rich new voice functionality in Skype for Business with Cloud PBX and PSTN conferencing, deep analytics with Delve Org Analytics and Power BI Pro, and advanced security features such as Lockbox and Advanced Threat Protection. And, with Enterprise Mobility Services, we now have more than 17,000 customers.” “In our commercial business we continue to transform the product mix to annuity cloud solutions and now have 75,000 partners transacting in our cloud,” said Kevin Turner, chief operating officer at Microsoft.

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