Microsoft has just released its earnings report for the fourth quarter of its fiscal year. As expected, the company took a nearly $8 billion write-off for costs associated with its acquisition of Nokia’s phone business.

So it’s probably not all that surprising that the company says revenue from its Devices and Consumer business declined. Windows OEM revenue was also down, as PC makers (and shoppers) wait for a new crop of computers that will ship with Windows 10. Or something.

But now that the company has taken its write-off for Windows Phone hardware, the future could be a bit brighter. And if Windows 10 is successful, it could encourage consumers and enterprise customers to buy new laptops, tablets, smartphones, and other products designed to run Microsoft’s new operating system.

On the other hand, revenue from the Microsoft Surface tablet division is up, as is revenue from Xbox, search and advertising, and commercial cloud services.

microsoft lumia

Here’s a roundup of tech news from around the web. You can keep up on the latest headlines by following Liliputing on Facebook, Google+ and Twitter.

  • Microsoft earnings report
    It’s not all bad news — revenue from the Surface tablet division is up, as is revenue from Xbox, search and advertising, and commercial cloud services. [Microsoft]
  • Now you can root an Alcatel OneTouch Idol 3 smartphone
    The phone has been getting positive reviews for punching above its class… and now it could be a more versatile solution for power users. [xda-developers]
  • Google+ Photos is shutting down to make way for Google Photos
    You don’t need to be an active Google+ user to take advantage of Google’s new online photo service… and in fact, soon you won’t be able to use the version that was originally designed for the company’s social network. [Google+]
  • Report: Google Glass Enterprise Edition will be foldable and rugged
    They’ll reportedly look a lot like the Explorer Edition devices that had been available previously… but Google won’t try to hard to partner with fashion designers to make them look stylish. [9to5Google]
  • You’ll be able to install Windows 10 apps on an SD card… eventually
    Have a cheap tablet with barely any internal storage space? You might be hoping to install some apps on a microSD card. You’ll be able to do that with Windows 10… just not when the operating system launches on July 29th. That feature is coming later. [WinSuperSite]
  • launches a $49/year members-only store to take on Amazon
    The idea is that you pay $49 per year for membership into a club that only sells discounted goods… everything’s on sale. It’s like the online version of Sam’s Club. But Jet feels like its prices are competitive enough with Amazon that it even shows price comparisons. But after doing a little searching, I definitely found some items that are not cheaper on Jet. They offer a free 3-month trial if you want to check it out though. [Jet]

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7 replies on “Lilbits 304: Maybe Microsoft makes more money next year”

  1. For Microsoft to break even at some point with the Xbox would take quite a miracle.

  2. Without taking into account the “paper” loss from the write-off of the Nokia acquisition and a few other things ($8.4 billion) as well as their share repurchases and dividend payments ($6.7B in share repurchases and dividends) Microsoft actually made a decent profit. People with business related college degrees know how to read a financial statement and realize that Microsoft is actually doing quite well considering their Windows OS is slowly losing profitability (maybe Win 10 will change that but I doubt it considering the company is giving upgrades away to the vast majority of its users). If I were Nadella and the Microsoft board members I would not have timed my share repurchase program to the same quarter as the Nokia write-off (Microsoft would likely have been profitable according to GAAP regulations if they had held off a quarter on that program) but I think Microsoft is going to be fine for at least the short and medium term. Long term viability depends on the XBox product expanding and sales from the Windows app store increasing substantially. Microsoft also has its brand on computer peripherals such as mice and keyboards (I am using a Microsoft 1850 wireless mouse as I type, it is actually a great product so far) but at $12.99 for a mouse I don’t expect that line to contribute substantially to the bottom line. Let’s sum this up by me saying with my accounting degrees I understand that this loss is not something that will carry on to future quarters and will not be selling my Microsoft stock over this quarter’s GAAP “paper” loss although if XBox and other viable product lines don’t strengthen considerably over the next few years (as I expect Windows related sales to continue to decrease) I may change my tune on them.

    As for Ballmer I read he retired to have time to run that LA basketball team he just bought. As I am not a Microsoft insider I can’t say for certain why he actually left the company but he is retirement age and just bought himself one hell of a set of new obligations with the basketball team so the press’s story of him retiring from Microsoft to run his sports team makes sense.

    1. He bought the Clippers after he retired.

      Saying that Microsoft made a profit if you simply ignore all the billions they lost in this one area is disingenuous and sleight-of-hand accounting. The fact is, the company’s future profits will have to make up for this loss.

      Fortunately, though, I predict Microsoft will be able to make up for this within 6 quarters: slimming down and combining their operations, Windows 10, the next version of Office, and pulling back/lowering investment into the smartphone market will be the contributing factors to this.

      1. So, as usual, the average wage slave gets to bleed for corporate foam whippers burning cash instead of paying dividends.

        U.S. tax law makes burning cash the better option over paying dividends for corporations, by the way.

      2. “Saying that Microsoft made a profit if you simply ignore all the billions they lost in this one area is disingenuous and sleight-of-hand accounting.”

        They took a huge write down, which isn’t the same as a loss. They basically said, ‘We’re never going to make a profit on this asset, so we’re declaring that it’s value is the low value Y rather than the much higher value X.” It’s an acknowledgment of past losses and of the fact that the asset isn’t going to generate future profits, and is more a devaluation than a loss (though it gets reported as a loss and thereby lowers the company’s tax burden for the quarter). The effective loss was when they bought Nokia two years ago. Hence they are fundamentally profitable today, and just acknowledged a past screw up. It’s bog-standard business accounting, and not at all tricky or devious.

  3. It’s looking like the Nokia acquisition is why Balmer “retired” (AKA “was fired”) — if not for his stubborn efforts to get into smartphones, Microsoft would have had a nice profit instead right now.

    1. Well, it didn’t really start there…

      You see, Microsoft’s Windows CE had 36% of the mobile market a bit over a decade ago. Ballmer, not seeing any competition thought he had the market sewn up and stopped spending on it.

      Widely reported glitches and bugs went unfixed for a decade, not to mention a complete lack of improvements to small screen usability. So Ballmer pissed away Microsoft’s mobile advantage due to utter blindness. Crapple couldn’t have asked for a customer base better prepared for a switch by pure frustration! Ballmer (spell checker recommends ‘Embalmer’) gift to Apple…

      With the thoroughly wrong-headed Nokia gambit, he tried to fix his mistake by spending his way out of it. It produced so much bad publicity and wasn’t exactly a natural fit for Windows, you couldn’t tell if the main goal was to destroy Nokia or to free the of their redundancies.

      Having Foxconn build Microsoft phones to spec would have been way more cost effective.

      What lunacy trying to get the Nokia name just to – predictably – discard it. It becomes obvious that a lot of people who should be confined to a focused therapy setting are running around holding CEO titles and what not.

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