24 Oct 2014
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Microsoft's first quarter revenue exceeds expectation

By Catherine Knowles

Microsoft revenue has increased by 25 percent in the first quarter of fiscal 2015, but profit was brought down by the ongoing layoffs and the integration of Nokia’s phone business.

In the quarter ended September 30, Microsoft revenue was US$23.2 billion. The consensus expectation from analysts polled by Thomson Reuters was $22 billion.

The actual net income was $4.54 billion, or $0.54, which again exceeded expectation, but was a drop in earnings per share compared with last quarter by 13 percent. The analysts’ expectations of net income was $0.05 per share.

Integration and restructuring expenses were at a high of $1.14 billion, which hurt profit and had a negative impact equivalent of $0.11 per share.

These expenses primarily came from the ongoing meshing of the Nokia Devices and Services business and the fact that the company had to carry out a huge number of layoffs in recent months. The company announced in July its intention to lay off 18,000 employees, or about 14 percent of its workforce. This is the largest staff reduction in the history of the company.

Microsoft splits its business into two main segments, devices and consumer, as well as commercial. The revenue of the former rose by about 47 percent to almost $11 billion, while the commercial group revenue rose 10 percent to $12.3 billion. For Commercial, cloud computing software and services such as Office 365, Azure and Dynamics CRM contributed to the increase by jumping 128 percent.

Microsoft CFO Amy Hood released a statement saying the results displayed ‘a strong start to the year’. She says Microsoft benefitted from continued momentum in sales of cloud computing products and the devices businesses making meaningful progress.

“We are innovating faster, engaging more deeply across the industry, and putting our customers at the center of everything we do, all of which positions Microsoft for future growth,” says Satya Nadella, Microsoft CEO.

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