Nokia drags Microsoft’s quarterly profit down 7%

Microsoft reported a 17.5% increase in revenues, but a fall in profits of 7% for the quarter ending 30 June

Microsoft reported a 17.5% increase in revenues for the quarter ending 30 June to $23.3bn, but profits fell 7% to $4.6bn due to losses of $692m in the Nokia division acquired in April 2014.

The revenue was above analysts' average estimate of $23bn, ironically because of $2bn in additional sales from Nokia.

Microsoft sold 5.8 million Lumia smartphones and 30.3 million non-Lumia, lower-end feature phones in the quarter, totaling 36.1 million compared with Apple’s 35.2 million iPhones sales in the same period.

Last week, Microsoft announced it would cut 18,000 jobs, with most of these (12,500) to be in the Nokia phone business.

"We are driving growth with disciplined decisions, bold innovation, and focused execution," said chief executive Satya Nadella in a statement.

“We are galvanised around our core as a productivity and platform company for the mobile-first and cloud-first world, and we are driving growth with disciplined decisions, bold innovation, and focused execution,” he said.

Nadella highlighted revenues from Microsoft's cloud division, which he said were set to double to $4.4bn in 2014.

Shares in Microsoft were mostly flat in after-hours trading, but they are up more than 20% for the year as investors hope Nadella's vision for change will lead to a boost in the bottom line, reports the BBC.

Announcing the planned job cuts, Nadella said they were in part aimed at moving Microsoft away from its core software operations towards its cloud computing business.

Clarifying Microsoft’s position as a hardware producer, he said: “We’re not in hardware for hardware’s sake, and the first-party device portfolio will be aligned to our strategic direction as a productivity and platform company.”

With reference to Microsoft’s Windows operating system, Nadella told analysts on a results conference call that the next version of Windows will amalgamate the current three versions of Windows into one.

Nadella said the one operating system will cover all screen sizes, ranging from desktops and laptops, to tablets and smartphones, reports Techspot.

Previously, Microsoft had multiple teams producing different versions of Windows. “Now, we have one team with a common architecture," said Nadella.

But the next version of Windows will still be sold in different versions, some with a subset of the features to suit the particular device.

For example, it is expected that the Windows Phone and Windows RT versions of Threshold will not include the desktop, but will run universal Windows apps also available for desktop systems.

According to the latest rumours around the next version of Windows, the operating system is expected to be launched in early 2015 and once again include the Start menu for desktop users.

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