Mi­crosoft books $8.4 bil­lion write-down on phones

The Guardian (Charlottetown) - - BUSINESS - THE AS­SO­CI­ATED PRESS

Mi­crosoft booked an $8.4 bil­lion charge in the fourth quar­ter, swal­low­ing a bit­ter pill by writ­ing off the Nokia phone busi­ness it bought just over a year ago. It nar­rowly beat an­a­lysts' de­pressed ex­pec­ta­tions for a quar­ter that also saw a steep de­cline in per­sonal com­puter sales even as it pre­pares to launch its latest op­er­at­ing sys­tem, Win­dows 10.

The Red­mond, Wash­ing­ton­based soft­ware gi­ant posted a net loss of $3.20 bil­lion, or 40 cents per share, re­vers­ing a profit of $4.61 bil­lion, or 55 cents per share, a year ago.

Ad­justed to ex­clude the charges, the com­pany posted a quar­terly profit of 62 cents per share, beat­ing the av­er­age es­ti­mate of 15 an­a­lysts sur­veyed by Zacks In­vest­ment Re­search of 31 cents per share.

The write-down was ex­pected af­ter CEO Satya Nadella an­nounced 7,800 job cuts two weeks ago.

The com­pany will con­tinue to make phones on a smaller scale, par­ing down its low­er­cost of­fer­ings.

Nadella told an­a­lysts on a con­fer­ence call he'd like Win­dows phones to be more tar­geted at high-end busi­nesses and their em­ploy­ees, much like its Sur­face tablet, which saw up­beat sales.

“We have a for­mula there that I would like to ap­ply more broadly,” Nadella said.

The dif­fi­cult quar­ter comes ahead of the launch of Win­dows 10 on July 29, a free up­grade for users of Win­dows 7 or 8 for the next year.

The com­pany hopes that bet­ter in­te­grat­ing its store into the re­vamped Start but­ton and pow­er­ing more In­ter­net searches through Bing will com­pen­sate for the tem­po­rary dip in Win­dows rev­enue.

Mi­crosoft plans for Win­dows 10 to be its last ver­sion of Win­dows be­fore tran­si­tion­ing the busi­ness to a fee-for-ser­vice model down the road, although how that will work is un­clear.

The com­pany gave an out­look for rev­enue of $20.7 bil­lion to $21.3 bil­lion for the first fis­cal quar­ter through Septem­ber that was be­low the $22.6 bil­lion ex­pected by an­a­lysts polled by Fac­tSet.

Shares dipped $1.90, or 4 per cent, to $45.38 in af­ter-hours trad­ing.

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