Microsoft share price rises as it gets brutal with Nokia

Quarterly profits fell 7%, but investors were cheered up by Microsoft's cost-cutting plans.

by Rachel Savage
Last Updated: 31 Jul 2015

Eyebrows were raised when Microsoft bought Nokia’s struggling phones business last year, just before chief exec Steve Ballmer bowed out. It wasn’t clear, and still isn’t, that the once mighty software giant could take on Apple and Samsung in the increasingly crowded smartphone market.

New boss Satya Nadella seems to be a man with a plan, though, even if he did take 3,100 words to not really explain his ‘productivity and platform’ vision in a memo to staff last week. He also announced 18,000 job cuts, 12,500 of which are going from Nokia. And yesterday the company said it’s going to make the former pride of Finland profitable by 2016, even as the unit’s $692m (£405m) loss dragged quarterly profits down 7% to $4.61bn.

Chief financial officer Amy Hood told analysts the company is going to strip out $1bn of the phone business’ costs to get it in the black in two year’s time. Meanwhile, sales in the quarter to the end of June rose 17% year-on-year to $23.4bn, mainly due to the extra revenue from Nokia.

Nadella’s aim to focus Microsoft on cloud computing also seems to be paying off, as sales of the software to businesses grew 147% and are now $4.4bn on an annualised basis.

Investors were happy, sending shares up 1.6% to $45.55 in pre-market trading. That’s the highest since the middle of the dotcom crash in 2000. If Microsoft’s shares spike up towards $60 again, then everyone might want to get worried...

Credit: Yahoo Finance


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