Microsoft profits drop year-on-year as restructuring forges on

Microsoft's annual profits dropped again after it spent $190m on business restructuring and integrating Nokia Devices and Services business

Microsoft has seen another drop in annual profits as it spent $190m for business restructuring and the integration of its Nokia Devices and Services business.

In its financial report for the third quarter of 2015, Microsoft announced net income of around $4.98bn, a drop of $6.75m year-on-year.

But it has finally begun to reap the benefits as it announced revenue of $21.7bn for this quarter, a 6% growth from the same period the year before.

Microsoft said the increase came from investing in areas of product growth, and the growing uptake in Microsoft Azure and Office 365.

“We executed with strong operational and financial discipline again this quarter, and are seeing positive impact from our investments in key growth areas,” said Amy Hood, Microsoft’s chief financial officer.

“In our commercial business, we continued to see healthy underlying fundamentals with strong renewals of volume license annuity contracts, mix shift to cloud offerings and solid bookings.”

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In January 2015, Microsoft said it spent $243m on restructuring during the second quarter of the financial year, including “employee severance”, “consolidation of facilities and manufacturing operations”, and buying Nokia’s devices arm.

In its most recent quarterly statement it reported spending $1.57bn on the re-organisation effort in the last 9 months, and said more will be spent on the firm’s “discipline and prioritisation efforts”.

“In Q4 we expect to incur $100m in integration expenses, and separately, another $100m in restructuring expenses,” said Hood.

Microsoft’s cloud offerings, Azure, Office 365 and Dynamics CRM, show the most potential. Office 365 has 50 million monthly users.

The firm hopes to grow its Office offerings, and earlier this month announced Office 2016. It has released new versions of Office for mobile and Skype for business.

The imminent release of Windows 10 leaves enterprises deciding whether or not to stick with the Microsoft estate.

“We are focused on making Windows 10 the most loved version of Windows ever,” said Microsoft CEO Satya Nadella.

“Perhaps, most importantly, last quarter I talked about how Windows 10 will be a service across an array of devices and will usher in a new era of more personal computing. An era where the mobility of the experience, not the device, is paramount.”

 

 

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