Thursday 24 April 2014

Microsoft profits fall despite consumer, business line sales increases

Microsoft profits fall despite consumer, business line sales increases

Microsoft's Q3 2014 revenue remained flat at $20.40 billion (about £12.1bn or au$22bn), compared with $20.49 billion (about £12.4bn or au$22.5bn), in revenue during the same quarter last year. Operating income during the quarter decreased 9% to $6.9 billion (about £4.1bn or au$7.45bn), during Q3, despite a decrease in operating expenses of $500 million (about £297m or au$540m).


Microsoft's net income during Q3 2014 decreased 8% from $6.1 billion (about £3.6bn or au$6.6bn) to $5.6 billion (about £3.3bn or au$6.05bn), compared with last year.


"This quarter's results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world," said Satya Nadella, in his first earnings statement as Microsoft CEO. "We are making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions."


Consumer products


Microsoft sold in 2.0 million Xbox console units, including 1.2 million Xbox One consoles, during the quarter. Surface revenue increased more than 50% during the quarter to approximately $500 million (about £297m or au$540m).


Bing U.S. search share grew to 18.6% of the market, while search advertising revenue grew 38%. The company's devices and consumer revenue increased 12% to $8.30 billion (about £4.9bn or au$8.9bn) overall, compared with Q3 last year, due in large part to Windows OEM revenue, which increased 4%.


Office 365 Home reached 4.4 million subscribers during Q3, an increase of nearly 1 million subscribers from Q2.


Business-to-business


Microsoft's business-to-business revenue grew 7% to $12.23 billion (about £7.2bn or au$13.3bn) during the quarter, with Office 365 revenue doubling compared with Q2. Azure revenue increased 150% while Windows volume licensing revenue increased 11%.


"Our SQL Server business grew double-digits again this quarter, and with the announcements of SQL 2014 and Power BI for Office 365, we offer a unique, comprehensive, end-to-end data and analytics solution," said Kevin Turner, COO at Microsoft.


Despite the positive growth in most of the organization's products and services revenue, The Wall Street Journal and Forbes speculated Microsoft's slumping PC sales were to blame for the profit slide. As time of publication Microsoft had yet to reveal its Q3 PC sales figures.


Microsoft expects to close the acquisition of the Nokia Devices and Services business on April 25, the company said in its earnings statement.


Recent news


Last week, Microsoft made Office 365 available for $69.99 per year (about £41 or au$74) and previewed an application that offers users in-depth analytics and interactive capabilities for PowerPoint. The company also revealed three services designed to ease data capture, storage and usage: the SQL Server 2014, Microsoft Azure Intelligent Systems Service and Analytics Platform Systems. Plans for a $1.1 billion Microsoft data center in Iowa went public.


In March, the company introduced Microsoft Office for iPad and Microsoft's new Enterprise Mobility Suite, which includes a series of tools designed to make it easier for IT departments to manage mobile devices and protect sensitive data.


In February, Nadella was named the third CEO of Microsoft, succeeding Steve Ballmer and Bill Gates.

















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