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.
Nokia’s handset business contributed $1.99 billion to Microsoft’s revenue stream in its fourth quarter, which ended June 30.
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.