Microsoft’s Fiscal Q4 2014 Earnings: Revenue Growth Amid Profit Challenges
Microsoft reported its fiscal fourth-quarter 2014 results, posting $23.38 billion in revenue and earnings per share (EPS) of $0.55—falling short of analyst expectations of \(0.60 EPS, despite surpassing revenue projections of \)23 billion.
Key Financial Highlights
- Revenue Growth: Up 18% year-over-year, driven by corporate Windows sales and Nokia’s hardware contributions.
- Operating Income: Reached $6.48 billion, reflecting steady profitability.
- Segment Performance:
- Devices & Consumer: $10 billion revenue (+42% YoY), fueled by Nokia’s phone business.
- Commercial: $13.48 billion revenue (+11% YoY), led by enterprise software and cloud services.
- Devices & Consumer: $10 billion revenue (+42% YoY), fueled by Nokia’s phone business.
Nokia’s Impact on Earnings
Microsoft’s $7 billion acquisition of Nokia’s hardware division added $1.99 billion in phone revenue but dragged down profitability:
- Lumia Sales: 5.8 million Windows Phones sold.
- Financial Drag: Reduced EPS by $0.08 and contributed to a $692 million operating loss in the segment.
Cloud and Software Momentum
- Azure & Office 365: Revenue more than doubled year-over-year.
- Cloud Run Rate: Commercial cloud services reached $4.4 billion annually.
- Office 365 Subscribers: Added 1 million users, ending the quarter with 5.6 million total.
Market Reaction and Strategic Shifts
Despite revenue growth, Microsoft’s EPS miss led to a slight dip in after-hours trading. The company’s ongoing restructuring—including 18,000 job cuts—highlights its focus on cost-cutting to restore margins.
Full-Year Performance
For fiscal 2014, Microsoft reported:
- Total Revenue: $86.63 billion
- Operating Income: $27.76 billion
- EPS: $2.63
The Road Ahead
Microsoft’s transition to a cloud-first, device-driven business model shows promise, but profitability challenges persist. Investors will watch for improved cost efficiency and sustained cloud growth in future quarters.
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