Microsoft Reports $23.38B FQ4 Revenue Including $2B In Phone Top Line, Misses With EPS Of $0.55

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Today after the bell Microsoft reported its fiscal fourth quarter performance, including revenue for the period of $23.38 billion and earnings per share of $0.55. Analysts had expected the company to earn $0.60 on revenue of $23.00 billion.

In the quarter, Microsoft recorded Surface revenue of $409 million. Its operating income totaled $6.48 billion. Its revenue figure for the period grew by 18 percent. Critically, revenue from its Windows product rose 3 percent, on strong sales of the operating system to corporate clients. The company also reported $1.99 billion in phone revenue, stemming from its purchase of Nokia’s hardware assets for more than $7 billion.

The company sold 5.8 million Windows Phone-based Lumia handsets in the period. That business cost the company $0.08 in earnings per share and lost it $692 million in the quarter. Had Microsoft not purchased the asset, it would have hit its profit mark.

Microsoft lost a fraction in regular trading, lagging behind a broadly higher market. Following its mixed earnings, the company is slightly down in after-hours trading. Investors appear to be weighing the profit miss slightly more heavily than the company’s profit miss. Given that you can’t have the former without the latter, it’s a tricky balance.

The company’s Devices and Consumer segment revenue totaled $10 billion. Its other main business segment, Commercial, saw its revenue rise to $13.48 billion. Those figures are up 42 percent and 11 percent, respectively. The 42 percent bump, of course, is due in large part to the new revenue that the Nokia purchase brought to the company.

In its sequentially preceding quarter, Microsoft reported revenue of $24.4 billion in revenue, and earnings per share of $0.63. The street, therefore, expected Microsoft’s earnings to decline in this quarter when compared to its second-most recent.

Azure and Office 365 grew “more than” 100 percent when compared to their year-ago tallies. According to Microsoft, the “annual run rate” of its corporate-facing cloud business is $4.4 billion. Office 365 for consumers picked up another 1 million subscribers, ending the quarter with more than 5.6 million.

It’s now easier to grok why Microsoft is dumping around 18,000 employees: If it is going to recover its margins and clock in profits in keeping with the street’s expectations, it has no choice but to trim costs.

More on this shortly, but it seems that Microsoft’s transition to a cloud and device company continues, but its profit miss will weigh on its shares.

Considering its full fiscal year, Microsoft had revenue of $86.63 billion, operating income of $27.76 billion, and earnings per share of $2.63.