WASHINGTON, United States. Microsoft has announced a net loss of $3.2bn (£2.1bn), following a substantial writedown on the value of its smartphone business.
Earlier in July, the computing giant had unveiled a $7.5bn (£4.8bn) charge relating to the smartphone enterprise it had acquired from Nokia.
Traditionally a software maker, the write-off has been seen as a decisive moment for Microsoft – which effectively admitted defeat in its attempt to become a major player in the smartphone market, alongsideSamsung and Apple.
The corporation was further hit by a wave of job cuts, and disappointing levels of demand for its Windows operating system.
In comparison, Microsoft had reported net income of $4.6bn (£2.9bn at today’s exchange rate) for the same period last year.
Despite the gloomy results, the US tech firm’s revenues actually managed to surpass investors’ expectations slightly – at $22.2bn (£14.2bn).
If the smartphone write-off was to be excluded from Microsoft’s figures, the company would have posted a quarterly profit of 62 cents (40p) per share – double the 31 cents (20p) per share that analysts had predicted.
The company’s CEO, Satya Nadella, has confirmed it will continue to produce mobile phones on a smaller scale – however, 7,800 job cuts at the corporation were announced a fortnight ago.
Growth areas in Microsoft included its cloud computing division, Surface tablets, the Xbox gaming system, and advertising revenue from the Bing search engine – which boasts 20.3% market share in the US.
Following the financial announcement, shares fell by 3.7% in after-hours trading.
Minutes after Microsoft, Apple posted its financial results for the three months to the end of June – and the figures showed a dramatically different tale.
It racked up profits of $10.7bn (£6.9bn) on revenues of $49bn (£31.5bn), following bumper sales of the iPhone 6 and 6 Plus.
Credit: Sky News
