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July 23, 2014

Microsoft profits drop 7%

Hauls in $86bn revenue over past twelve months.

By Ben Sullivan

Microsoft reported a 7% drop in Q2 profit, pinning some of the blame on the acquisition of Finnish phone maker Nokia.

The software firm said that profit for March to June was $4.6bn, a dip from $4.97bn in the same period last year. Nokia hemorrhaged $692m from Microsoft.

Quarterly revenue, however, rose 17% to $23.38bn, just beat analyst expectations of $23bn.

Growth was drawn from from Microsofts handsets, with OEM revenue up 3%. Office 365 Home and Personal subscribers reached 5.4 million, adding another 1 million subscribers in this quarter. Bing search ad revenue grew 40%, with the US search share growing 19.2%.

For the twelve months ending 30 June, Microsoft commanded an $86.8bn revenue, with an operating income of $27.8bn.

Last week, CEO Satya Nadella today revealed 18,000 staff will be axed in the next year, including 12,500 Nokia office and factory workers.

A total of 32,000 Nokia staff were expected to join Microsoft as part of the acquisition. The first 13,000 workers to go will be told in the next six months, said Nadella.

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In a letter to staff he wrote: "Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment.

"We will simplify the way we work to drive greater accountability, become more agile and move faster. Making these decisions to change are difficult, but necessary."

In a statement yesterday, he said: "We are driving growth with disciplined decisions, bold innovation, and focused execution."

Nadella also dropped massive hints surrounding the unification of the Windows operating system for mobile devices.

He said: "We will streamline the next version of Windows from three operating systems into one single converged operating system for screens of all sizes. We will unify our stores, commerce, and developer platforms to drive a more coherent user experience and a broader developer opportunity."

A slight slowdown in the slump of the worldwide PC market went some way to help Microsoft curb losses in its core office software department. Gartner’s quarterly release indicated that during the April to June period, PC shipments inched up by 0.1% to 75.8 million units. On the other hand, according to IDC calculations, PC shipments dropped by 1.7% to 74.4 million units.

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