Microsofts sales increase, helped by Nokia acquisition

Written by New York Times | Seattle | Updated: Oct 25 2014, 08:06am hrs
Sales in the PC business are still in the dumps. Traditional software sales are losing steam to cloud services. And many venerable technology companies are struggling to leap from the old way of doing things to the new.

Microsoft Steady as she goes. While the company still has much to prove in markets like mobile phones, Microsoft on Thursday offered tantalising signs of progress in the transformation of its business. In the last quarter, the company had a 25% increase in sales, largely because of its acquisition of Nokias mobile phone business. Over all, what we see is the increasing competitiveness of our products, Satya Nadella, CEO, said in a conference call with analysts.

For the three months ended September 30, Microsofts fiscal first quarter, it said its net income was $4.54 billion, or 54 cents a share, compared with $5.24 billion, or 62 cents a share, a year ago. Revenue was $23.20 billion, up from $18.53 billion. The average estimate of analysts surveyed by Thomson Reuters was 49 cents a share for the period and $22.02 billion in revenue.

The dip in profit was largely the result of $1.14 billion in costs associated with the companys acquisition of Nokias phone business. Without that expense, Microsoft would have reported earnings of 65 cents a share.

In July, Microsoft announced plans to reduce costs by laying off about 14% of its global work force, by the end of June next year. Most cuts are related to the companys Nokia acquisition.

The results impressed investors, especially when compared with weak results from other technology bellwethers like IBM. I thought these were stellar numbers in a choppy IT spending environment, said Daniel Ives, analyst at FBR Capital Markets. Shares in the firm rose 3% in after-hours trading.

Microsofts resilience stems in part from the reluctance of corporate customers to abandon their deep investments in the companys products.