Microsoft to face up to $1.6B in costs related to Nokia
Earnings disappoint in 4th quarter as it absorbs money-losing handset business
Microsoft expects to face costs of $1.1 billion to $1.6 billion US in the first half of 2015 to deal with its restructuring as it absorbs Nokia’s money-losing handset business.
CEO Satya Natella announced he would trim 18,000 jobs or 14 per cent of the company’s workforce last week as Microsoft completes its takeover of Nokia.
That’s a drop in the bucket compared to the tech giant’s full revenue stream, which rose to $23.4 billion from $19.9 billion a year ago.
Microsoft beat Wall Street’s expectations on revenue, but came in lower than expected on earnings, which totalled 55 cents a share. Wall Street was expecting Microsoft to post fiscal fourth-quarter earnings of $0.60 per share on revenue totalling $22.99 billion.
Nokia contributed an operating loss to Microsoft’s bottom line, pushing down its net income by seven per cent to $4.6 billion for the quarter compared to $4.9 billion a year earlier.
The tech giant has been successful in building cloud-based revenue – an important emerging area in technology – with income up 147 per cent in that sector.
But there is a perception that it has grown too large and unweildy, even before it took over Nokia, and investors are looking for Natella to restructure and focus the business.