Microsoft posts record loss, mainly due to phone business

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Microsoft just reported a $3.2 billion quarterly net loss – its largest ever – as it wrote down its Nokia phone business, coupled with falling demand for the Windows operating system.

The company suffered a charge of $7.5 billion in the fourth quarter related to restructuring its mobile phone business, which it bought from Nokia last year.

Microsoft writes down Nokia purchase

Under the Chief Executive Satya Nadella, Microsoft has been changing to focus more on cloud services as demand for its Windows operating system slows amid a general downturn in the PC market.

Sales of Windows to computer makers to install on new PCs fell 22% in the quarter. The company will roll out Windows 10  on July 29th, a long-awaited launch after muted demand for Windows 8.

Microsoft wants to increase revenue by adding search and gaming into Windows 10, the company said in April. Bing, the firm’s search engine, looks like it will become profitable by the end of next year, the company’s Chief Financial Officer Amy Hood said recently.

Meanwhile sales of Windows to business fell 21% from the same time last year, when demand for Windows surged after Windows XP support was discontinued.

Microsoft’s cloud business on the other hand, which includes Office 365 and Azure, rose 96%. More than 3 million Office 365 subscribers were added in this financial quarter, taking the total number to 15.2 million at the end of June.

The company also said that it would cut 7,800 jobs this month – around 7% of its workforce – mainly in the phone hardware business unit.

SOURCE: Reuters.

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