Microsoft announced the quarterly report for the fiscal fourth quarter, showing a record loss. The company’s report shows weakness in software, an area where Microsoft is usually strong.
However, the report also shows strength in consumer-technology, areas in which the company is usually middling. Overall, the revenues for the quarter that ended on June 30 were $22.2 billion. According to the report, the biggest reason for the loss is the company’s acquisition of Nokia. Microsoft had to pay a charge of $7.5 million for the deal.
Chief executive Satya Nadella said he is proud of the results the company delivered. Under his guidance, the company shifted the focus to software and cloud services. But the results were not as good as expected.
In the fourth fiscal quarter, the company recorded just 0.2% rise in sales of software products. Most of the profit of the company comes from sales of MS Office, Windows and other products. The total sales of those products accounted for $13.53 billion. It was the slowest growth pace in the past two years for Microsoft.
For the first in history, the company will let people with existing computers to upgrade their software free of charge. Microsoft will let users upgrade to the latest Windows 10 platform, hoping that those customers will pay for add-ons like office and web-search ads and add-ons. It is a huge test for Microsoft, as the company hasn’t had success in selling add-on services.
The good news for Microsoft is that consumer divisions recorded an increase in revenue. For example, sales of the Surface tablet doubled from a year ago. Sales of the Xbox and video games rose to 27%. The company needs consumer-focused areas to do well, as Microsoft is preparing for the launch of Windows 10. The new OS, which should compensate for the lackluster performance of the Windows 8, is scheduled for release on July 29. The company’s idea is to integrate search and gaming add-ons into Windows 10, a way to generate revenue since the OS will be free of charge.
Microsoft’s shares were down by 3.9% in after-hours trading to $45.45, but they went up in 4 p.m. trading to $47.28.
Overall, in the fourth quarter, the company’s loss amounts to $3.2 billion, which is 40 cents per share. A year ago, the net income was $4.6 billion which accounted for 55 cents per share.
Microsoft also announced that the company plans to cut 7,800 jobs in the phone hardware business.