Microsoft

(Microsoft)

Microsoft 2Q Earnings Hit by Higher Costs

By Earnings FOXBusiness

Microsoft (MSFT) reported weaker earnings in the second quarter, although the results matched Wall Street expectations amid stronger revenue from mobile devices.

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The software giant said Monday it booked a profit of $5.86 billion, a 10.6% decline compared to year-ago earnings of $6.56 billion. On a per-share basis, Microsoft earned 71 cents versus 78 cents.

The bottom line included $243 million in expenses tied to Microsoft’s restructuring plans and its acquisition of the Nokia phone business last year. The added costs lowered earnings by two cents a share.

In July, Microsoft announced it would cut up to 18,000 jobs, equivalent to 14% of its workforce, following the addition of Nokia.

Total revenue climbed 8% to $26.47 billion, beating the consensus estimate of $26.33 billion.

Shares fell 3.1% to $45.56 in after-hours trading. The stock is up 1.2% since the start of 2015.

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Microsoft’s devices and consumer division posted revenue growth of 8% in the final three months of 2014, totaling $12.9 billion. Sales of the Surface tablet hit $1.1 billion, up 24%, while Microsoft sold 6.6 million Xbox gaming consoles.

Phone hardware revenue came in at $2.3 billion, with 10.5 million Lumia devices sold during the quarter.

Compared to the first quarter, subscribers to Office 365 Home and Personal rose 30% to 9.2 million.

The commercial unit also logged higher sales, driven by a 114% increase in cloud revenue. The segment’s overall top line rose 5% to $13.3 billion.

“Microsoft is continuing to transform, executing against our strategic priorities and extending our cloud leadership,” Chief Executive Satya Nadella said in a statement.

The company’s quarterly earnings report comes on the heels of a debut for Windows 10. Last week, Microsoft offered a peek at the next version of its flagship operating system, which will power computers, smartphones and tablets.

Microsoft also unveiled a hologram device, HoloLens, a virtual-reality headset that is scheduled for release when Windows 10 goes on sale in the fall.

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