Microsoft profits fall following Nokia buy

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Just 5.8 million Lumia devices sold in the quarter ‘driven by low price points’

Microsoft’s revenues grew by 17 per cent to $23.4 billion (£13.8 billion) for the three months ending June 30th but profits fell 7.1 per cent quarter-on-quarter to $4.6 billion (£2.7 billion), thanks to its acquisition Nokia.

It’s $7.3 billion (£4 billion) acquisition of the Finnish manufacturer’s handset division in April added revenues of $2 billion (£1.2 billion) between April and June, but the division lost $692 million (£407 million), which is partly explained by some one-off costs associated with the acquisition.

Microsoft sold just 5.8 million of Nokia’s flagship Lumia range across the quarter, most in the low price point, lagging way behind the 35.2 million iPhones Apple sold over the same period. Sales of non-Lumia devices were 30.3 million.

“We are galvanized around our core as a productivity and platform company for the mobile-first and cloud-first world, and we are driving growth with disciplined decisions, bold innovation, and focused execution,” said Microsoft chief executive officer Satya Nadella.

Microsoft announced last week that it would cuts 12500 jobs, around half of the workforce it acquired from the Finnish manufacturer, as part of cuts that will see 18000 people leave Microsoft, the largest reduction in headcount in its history.

Microsoft says it envisions that this cost-cutting drive will cost between $1.1 billion and $1.6 billion when it is recorded in its next financial year. The firm anticipates it can make around $600 (£350 million) million of savings per year by implementing the cost-cutting.

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