Robust Cloud Demand Lifts Microsoft's Fourth Quarter
Strong cloud momentum helps the software giant book strong revenue, but it's not enough to avoid an earnings-per-share miss.Microsoft chalked up $23.38 billion in revenue during its fiscal 2014 fourth quarter, slightly above Wall Street estimates of $23 billion, on strong sales of cloud services and business software. Profits failed to meet analyst expectations, however. The company reported net income of $4.6 billion, or $0.55 per share, for the quarter ended June 30. Wall Street analysts had expected earnings per share of 60 cents. For the full fiscal year, Microsoft generated $22 billion in profit on $86.8 billion in revenue, compared with $21.8 billion in profit and $77.8 billion in sales in fiscal 2013. Microsoft's Phone Hardware category, anchored by Nokia Devices and Services (NDS), contributed nearly $2 billion in sales during the quarter. The NDS acquisition, completed April 25, resulted in an 8 cents per share hit, according to the company. Last week, Microsoft announced that it was laying off 18,000 workers. NDS is being particularly hard hit, with the loss of 12,500 positions. The effects of the job cuts are expected to linger on the company's balance sheet in the form of a restructuring charge of $1.1 billion to $1.6 billion over the next four quarters.
Nonetheless, Microsoft CEO Satya Nadella credited brisk adoption of his company's cloud offerings for the otherwise healthy financials. "I'm proud that our aggressive move to the cloud is paying off—our commercial cloud revenue doubled again this year to a $4.4 billion annual run rate," said Nadella in a statement.