Microsoft beats expectations but stock still slides
Updated Tuesday, July 21
Microsoft’s expectations-beating $22.2 billion in fourth quarter revenue wasn’t enough to keep the stock from falling 3.5% in after-hours trading Tuesday, as the company’s $7.5 billion Nokia writedown contributed to Microsoft’s largest-ever quarterly net loss of $3.2 billion.
Investors were likely also dismayed by Microsoft’s (MSFT) commercial revenue, which at $13.5 billion fell short of expectations. Meanwhile, the company’s device sales fell 13% to $8.7 billion, while its equipment manufacturing revenue slid 22% as Windows XP reached its end of life.
Microsoft announced earlier this month it would write down its 2014 acquisition of Nokia’s handset business, a deal spearheaded by former CEO Steve Ballmer but one that failed to result in significant market share for the company’s Windows Phone devices.
Still, there are reasons for optimism in Redmond. Microsoft’s Surface tablets and Xbox gaming unit are showing promise, while its Bing search engine increased its market share and advertising revenue. And the company’s sales increased over the first quarter of the year, when it made $21.7 billion in revenue. That’s in part because the Washington-based computing company’s cloud business continues to grow — revenue from Microsoft’s cloud services, such as Office 365 and Azure, rose 88% this quarter.