Microsoft's earnings for the fourth quarter are in, and they show an operating loss of $2.1 billion, despite $22.2 billion in revenue (compared to $23.3 billion last year). A lot of that is due to the previously announced write-down for Nokia (and 7,800 job cuts) that caused an $7.5 billion hit. Of course, we knew that was coming, but the other news is that revenue and operating income were slightly down from last year too. Microsoft sold 8.4 million Lumia phones in Q4 (compared to 5.8 million last year), but revenue dropped 38 percent to $748 million. As the company looks forward to Windows 10, revenue for that division dropped 22 percent, a figure that it attributed to XP's end-of-support cycle.
The net loss in Q4 amounted to $3.2 billion, which Bloomberg reports is its biggest loss ever. This occurs as Microsoft under new CEO Satya Nadella changes its approach to segments like hardware, and the cloud. It made more money from hardware, as revenue for Surface grew to $888 million and Xbox claimed a 27 percent gain, with 1.4 million consoles sold (XB1 + 360), compared to 1.1 million last year. Even Bing is making more money, and says its market share in search has grown to 20.3 percent (Update: On the call, Nadella said Bing will transition to profitability in the coming fiscal year). Office 365 Consumer added more than 3 million customers in Q4, and commercial cloud revenue is up 88 percent.
Microsoft is changing how it does business as seen in the upcoming launch of Windows 10. This quarter's results appear to reflect some of the painful parts of that change, and show how big the task is that Satya Nadella has in front of him. The company's earnings call is just beginning (listen in here), and we will update this post with any interesting tidbits revealed there.