back to article Microsoft has RECORD quarter, in a BAD way - Sad Nad slashes phone biz

Brobdingnagian software biz Microsoft wrote down the biggest quarterly loss of its corporate history on Tuesday, reluctantly gulping down another $8.44bn of red ink - mostly associated with its train-wreck acquisition of Nokia. The latest writedown left Redmond with a net loss of $3.20bn for the three months ending on June 30 …

  1. Anonymous Coward
    Linux

    Sigh

    I still find these sorts of stories a bit odd. An organisation manages to flog an absolute shit load of stuff - mostly electrons, and be lightly vilified for it. If my little company managed to do half as well, I'd be pretty happy about it. Then again, I get to sleep at night without having to worry about shareholders baying for blood.

    I only feel a slight pang (no I don't) in my quest to make MS's fortunes increasingly irrelevant to me and my firm.

    1. Bob Vistakin
      Facepalm

      Re: Sigh

      After Windows 10 flops, perhaps their strategy to repurpose themselves as merely another Android app developer will work out fine, and their monthly Google play store payment will put them back in the black.

    2. Vic

      Re: Sigh

      An organisation manages to flog an absolute shit load of stuff - mostly electrons, and be lightly vilified for it.

      It's easy to flog large amounts of anything if it's cheap enough.

      Microsoft lost money on all that selling; that implies it's too cheap for them to survive on. That they didn't sell as much as they need implies it's too expensive for the market. And therein lies a bit of a problem...

      Vic.

      1. Naselus

        Re: Sigh

        "Microsoft lost money on all that selling; that implies it's too cheap for them to survive on. That they didn't sell as much as they need implies it's too expensive for the market. And therein lies a bit of a problem..."

        Did you actually read the article, or did you just see it involved Microsoft and immediate came to troll the comments? They only made an overall loss from the write-down. Without 1-off costs, they're looking at a 5 billion profit for the quarter... which is pretty good considering it's the Q immediately preceding a major flagship product release.

        1. Vic

          Re: Sigh

          They only made an overall loss from the write-down

          So ... they made a loss. Which means they couldn't sell enough of what they needed to sell at the price they needed to sell it.

          Which is what I said.

          Vic.

          1. Naselus

            Re: Sigh

            "So ... they made a loss. Which means they couldn't sell enough of what they needed to sell at the price they needed to sell it."

            No, you said they were selling 'too cheap for them to survive on'. Which isn't true unless they write down at least $5.2 billion dollars on bad acquisitions every quarter from here to the end of time. You looked at a one-off write-down, and incorrectly inferred a non-existent structural deficit from it - which you shouldn't have done, since if you'd actually read the article, it made it pretty clear that this was a fairly decent quarter in terms of sales and revenues. Making a loss due to one-off costs is not a problem, particularly when you're sat on a cash mountain like most of the big tech players.

            For all the 'Microsoft is doomed!' bullcrap, we're still talking about a company that has been consistently profitable for it's entire lifespan when 1-off costs are removed (and has been consistently profitable for 98% of it's lifespan when they aren't). I don't like MS any more than you do, but taking this as a sign that they're in any kind of trouble whatsoever is ridiculous.

        2. Tom 13

          Re: Without 1-off costs,

          Aye, there's the rub though. Are they really 1-off costs? Or will there be a new reason next year for 1-off costs. And the year after that. And so on.

          And that's assuming the major flagship release doesn't turn out to be the Titanic.

  2. Anonymous Coward
    Anonymous Coward

    But Windows 10 will change everything, right?

    Wrong. Forget about those billion devices.

    1. Florida1920

      Re: But Windows 10 will change everything, right?

      They're giving away Windows 10. I figure they know what it's worth.

  3. Charles Manning

    Can't blame Sad Nad for this...

    The Nokia write off was just a Ballmer turd bobbing to the surface.

    And Ballmer can be completely blamed on Bill Gates who basically installed his BFF and refused to have him removed.

    Nad is just the bloke in the hot seat when this happened. That it was going to happen was obvious.

    Maybe Nad is just there to cop the flack. Once the worst events have played out, and Nad has copped the flack, they'll rinse him and replace with another Gates/Ballmer stablemate.

    1. P. Lee

      Re: Can't blame Sad Nad for this...

      >Once the worst events have played out, and Nad has copped the flack, they'll rinse him and replace

      But it will still be too late for Windows mobile. The market has matured and left them behind. Whether they can survive as an add-on library to Android remains to be seen. I hope they can - I have little love for MS, but Google need a kick up the backside.

      The big test for Nad will be whether MS' OS X will arrive ok. Its looking awfully rushed at the moment and still hasn't shaken off the awful touch interface. If you have a UI which can auto reconfigure for touch/tablet/phone why doesn't it detect the lack of a touch screen and turn off the W8 elements no-one wants?

      I suspect W10 will be a short-term failure. The timing is all wrong. W7 went EOS before W10 existed. I've never seen W8 mass deployed. Companies will spin out the W7 installations to the end of support, just like they did with XP. Why would they do anything else? Touch interface? MS Store? I don't think so. Despite their protestations, I reckon MS will have another version of Windows out before the end of 2020 when the security updates get turned off. The only way around it will be to (as they have in the past) tie server software (which needs to be in support) to client software to client OS or to convince bankers etc that cloud is fine for them. Haha!

      1. Anonymous Coward
        Anonymous Coward

        Re: Can't blame Sad Nad for this...

        Not he greatest analogy. OS X was actually a complete OS upgrade. Sadly Win 10 is just Win 8 with some of the furniture moved about a bit. 20yr old in-kernel font rendering pwnage and myriad similar festering abscesses still lurking untouched beneath the dressings, waiting to infect you.

        1. Anonymous Coward
          Anonymous Coward

          Re: Can't blame Sad Nad for this...

          "Not he greatest analogy. OS X was actually a complete OS upgrade. Sadly Win 10 is just Win 8 with some of the furniture moved about a bit. 20yr old in-kernel ..."

          The OS-X kernel is older than the one in Windows - don't forget that OS-X was first released as NeXTSTEP in 1989 with a kernel that was first released in 1985. The first true NT release was 1993.

      2. Anonymous Coward
        Anonymous Coward

        Re: Can't blame Sad Nad for this...

        All those organizations still on XP(!) or 7 have to migrate somewhere sometime. If the move to 10 is less painful* than to another OS then MS (and the surrounding ecosystem) will still make money.

        Where "pain" is measured as mixture of transition costs, re-education of users, future support costs, Uncle Tom Cobbley and all. And your definition/estimations may vary from the consultants and bean-counters actually employed on the assessment.

        1. kryptylomese

          Re: Can't blame Sad Nad for this...

          Each migration is an opportunity for other operating systems to be utilised. Companies are using Use Linux at the back end of things, so there is a logical leap to the front end, and it works very well. Oh, and did I mention that it is a lot cheaper(mostly free) if you happen to have Linux skilled members in your IT team.

          1. Anonymous Coward
            Anonymous Coward

            Re: Can't blame Sad Nad for this...

            "Oh, and did I mention that it is a lot cheaper(mostly free) if you happen to have Linux skilled members in your IT team."

            If it's a largely windows desktop environment then the staff are probably going to be "Windows-skilled" and not "Linux-skilled".

            1. kryptylomese

              Re: Can't blame Sad Nad for this...

              I guess you failed to read "Linux at the back end" where they would have "Linux-Skilled" people. You must be one of those "Windows-Skilled" people.....

              1. Anonymous Coward
                Anonymous Coward

                Re: Can't blame Sad Nad for this...

                Read it carefully. You wrote " so there is a logical leap to the front end, and it works very well" 's were I took issue with the statement because it's the change at the front where the windows skill would be displaced. Were you thinking of pulling the server team off looking after those systems to run the help desk?

                And yes, my skills such as they are with programs that only run on MS systems

                1. kryptylomese

                  Re: Can't blame Sad Nad for this...

                  I am also guess that you as a Windows person are unaware that helpdesk requirements are MUCH smaller with Linux as a desktop operating system?

                  1. kryptylomese

                    Re: Can't blame Sad Nad for this...

                    "Programs that only run on Windows" is a very limited view. Linux can run most software that runs on Windows using Wine but even better than that is that there is normally a open source version that you can use that is most cases better than the version that runs on Windows and yes I am including Microsoft Office in this!

    2. nematoad
      Headmaster

      Re: Can't blame Sad Nad for this...

      "Maybe Nad is just there to cop the flack."

      If you are going to use a colloquialism please get it right.

      It should be:

      "Maybe Nad is just there to cop the flak."

      A war-time expression used to describe Axis anti-aircraft fire. From the German word "Fliegerabwehrkanone"

      From Wiktionary:

      Noun

      Fliegerabwehrkanone

      anti-aircraft gun (literally "Aeroplane Defence Cannon"); abbreviated as flak...

  4. Anonymous Coward
    Anonymous Coward

    Chat to Ginni

    Maybe Sat Nat could give Ginni @ IBM a call and share notes...

  5. asdf

    Ballmer is the gift that keeps on giving.

    >The latest writedown left Redmond with a net loss of $3.20bn for the three months ending on June 30. It was only the second time it has been forced to report a quarterly loss in its 29 years as a public company. The last time was in 2012, following another botched acquisition.

    ie The Ballmer (idiot) tax. Best to get it out of the way now I suppose and move on. Everyone (besides Yahoo's shareholders) is just glad JoJo the circus monkey didn't buy Yahoo as well.

  6. Hans 1

    >Phone Hardware was down 37.7 per cent in Q4, with $1.23bn in revenue. Worse, the division's gross margin was down 292.6 per cent, causing it to post a loss of $104m.

    Windows Mobile^H^H^H^H^H^HPhone is a dead end, I told you - it is getting hard to compete with Chinese knockoff androids.

    1. dogged

      which is presumably why sales were up.

      Alternatively, you're just reading your own opinions into things where they aren't actually there.

    2. Tom 13

      Re: Windows Mobile^H^H^H^H^H^HPhone is a dead end

      Depends on whether or not they can remove the last Balmerism that keeps on giving: that the desktop and phone have to have the same OS. Problem there is I don't think it's just a Balmerism, it's a Gatesism, too.

      But if they finally see that light, don't count them out. I think people would like to see at least one more vendor for phone OSes. Two is too risky on the monopoly side.

  7. Phoenix50

    It's all about the Spin...

    Oh, don't get me wrong - we knew the Nokia bomb had been thrown so I'm not overly surprised by the news. But I guess it's what you focus on isn't it:

    ◾Surface revenue grew 117% to $888 million, driven by Surface Pro 3 and launch of the Surface 3

    ◾Total Xbox revenue grew 27% based on strong growth in consoles, Xbox Live transactions and first party games

    ◾Search advertising revenue grew 21% with Bing U.S. market share at 20.3%, up 110 basis points over the prior year

    ◾Office 365 Consumer subscribers increased to 15.2 million, with nearly 3 million subscribers added in the quarter

    ◾ Commercial revenue increased slightly (up 4% in constant currency) to $13.5 billion, with the following business highlights:

    ◾Commercial cloud revenue grew 88% (up 96% in constant currency) driven by Office 365, Azure and Dynamics CRM Online and is now on an annualized revenue run rate of over $8 billion

    ◾Server products and services revenue grew 4% (up 9% in constant currency), with stable annuity performance offsetting declines in transactional revenue

    ◾Dynamics revenue grew 6% (up 15% in constant currency), with the Dynamics CRM Online install base growing almost 2.5x

    BUT:

    ◾Office Commercial products and services revenue declined 4%

    ◾Windows volume licensing revenue declined 8%

    ◾Windows OEM revenue decreased 22%

    Al in all? I'm not particularly panicked about the above - some downturns, but nothing that taken me by surprise. I think that main thing I can take from this (because I choose to), is that their diversified efforts are bringing home the bacon - Windows revenue might be in decline, but if there are 3 or four other billion-dollar business going great guns, then the future is just fine for Microsoft - even if no one is sure what the end picture will look like.

  8. Anonymous Coward
    Anonymous Coward

    Watch out Microsoft

    I can see a vulture circling overhead that is of a rather nasty and aggressive species called Carlus Icahanus who will be looking to carve you up.

  9. Michael Habel

    Remind me again why I should migrate away from a perfectly acceptable Windows 7 x64 Ultimate --- With Patch Tuesday support... Conceivably until the 14th, of January 2020 anyway. For something that doesn't? Prudy Start Menu's, and Metro Tiles be damned?!

    Better support?! Really I was brought up to believe that <Deity> helps those that help themselves... Now under Windows OSX I can just sit right back and, place all my "faith" into MicroSoft, doing the right things.A Company not terribly known for doing the right thing(s).

    While I think the idea of 24/7 roll out instead of sitting on it for upwards of a Month could in itself be a great thing... Having the Pills shoved up your backside against Ones will is... Well less cool.

    So unless someone can come up with a better reason then HAY ITS NEW! HAY DID WE TELL YOU ITS ALSO FREE?! I don't think I'll even waste the cycles trying to even playtest it. Much less be willing to then use it.

    I'm willing to bet that Once the ramifications of MicroSofts Update Policies hit home, and the inevitable amount of Machines crash on a MicroSoft Update... (AND, THEY WILL! If only because they have!),. Then Expect MicroSoft to have some tall explaining to do.

    For me this is an even deadlier curse then that ugly poor excuse for a redhead stepchild TIFKAM. At least you could reportedly still manage Windows 8.x retarded features, to get it somewhat working like normal. I fail to see such a Fix for WOSX here.. Sans cutting the Wire, and staying off-line. Which isn't really an option.

    1. dogged

      > Remind me again why I should migrate away from a perfectly acceptable Windows 7 x64 Ultimate --- With Patch Tuesday support... Conceivably until the 14th, of January 2020 anyway. For something that doesn't? Prudy Start Menu's, and Metro Tiles be damned?!

      Remind me again where anything in this article or comment thread says you should upgrade?

      Oh, it doesn't? And you're just throwing shit around like a confused monkey?

      Fine.

      1. Michael Habel

        To my friendly downvoter.... Since you seem to be of the opinion that Windows X is, going to be the next greatest thing since XP.... Would you mind sharing these opinions with the rest of us?!

        Thanks!

      2. Michael Habel

        Remind me again where anything in this article or comment thread says you should upgrade?

        Oh, it doesn't? And you're just throwing shit around like a confused monkey?

        Fine.

        You Sir are correct, there is nothing in the article at all about how the reception to Windows X over the coming months could spell either the success, or eventual continued failures in Redmond.

        We begin Redmond's fiscal 2016 with the Windows 10 launch next week, and it's very much a make-or-break moment. If the new OS is received as coolly as Windows 8 was, expect a very bloody year indeed for Microsoft.

        Not a single word at all....

        1. dogged

          Nothing says you have to upgrade.

          I think one of the most annoying things about commentards on the Register is their continual assumption that because a thing exists it is now mandatory and all alternatives have been deleted.

          It was MONTHS after the launch of Win8 before the usual suspects around would accept that it ran Win32 applications at all. "Oh no, everything's full screen now, I can't run multiple windows, what's the point" - really? Then you're a fucking idiot. Try clicking "desktop".

          Complaint through pig-ignorance. Disgusting.

          1. Michael Habel

            First off I couldn't give a toss about Windows (h)8! Its yesterdays news... And, I'm sure the poor souls saddled with it will be glad to see the back of it soon... The simple matter however remains... Those still on Windows 7, or (h)8, still retain a modicum of say on what happens to their Machines. A modicum that will soon disappear once Windows 10 hits. Effectively making anyone using it a Beta Tester! *cough* Current Consumer Branch *cough*. This is not some fable story, of a madman ITS A [RECATCED]'ing FACT!

            If given the choice of either Windows (h)8, or Windows 10, I'd almost have to take windows (h)8. I hate TIFKAM with every fiber of my core. But, the day I release the control of my Machine back to Redmond, will be the same Day a one Mr. Satan decides to go Figure Skating, on the reportedly thin ice.

            Besides I'd like to remind my Pro-Microsoft shrilling friends, that I'M NOT asking for your defense... But, as to a reason beyond "NEW" & "FREE", and a stealthy transition overnight. from Windows 7/8 Home Premium, to Windows 10 Home the next morning. Without much more express waring then the installer down at the corner.

            Yes you, and I know what its about. Could you say the same thing about your Parents?, How about your Grandparents? Or the Asylum Seekers across the road? That know jackall about Computers? And, just assume that its all good?

            And, this is all before we even get to the Cloud, and everything you do becoming the product on Windows 10! So please enlighten us with your savvy, shrilling ways as, to why everyone should move on? As no doubt, by your comments. You'll be one of the first to do so, no doubt.... /sarcasm.

            1. dogged

              You should move on to Win10 if it makes sense for you to move to Win10.

              As an example, dev boxes here at work are a mixture of Win7, Win8.n and Win10 because the software we're producing must support all of these. It's to go into factories where the lifespan of an assembly line is 8-10 years.

              If it makes no sense for you to move, don't move.

              If you are a private individual with lots of time and patience and you feel your existing OS is lacking, I strongly advise you to try linux if you haven't before. If it does everything you want and you have no issues with it, it's wonderful. If you don't meet those criteria or you're a business with cost centres, linux is almost certainly a more expensive option long term than Windows unless your business is something ephemeral and worthless like marketing or web design.

    2. AndrueC Silver badge
      Joke

      So unless someone can come up with a better reason then HAY ITS NEW! HAY DID WE TELL YOU ITS ALSO FREE?! I

      Indeed. That's a straw man argument if ever I've heard one ;)

    3. kryptylomese

      Linux is constantly being patched... But is it also better to start off with so YES you should upgrade!

  10. Anonymous Coward
    Anonymous Coward

    This is an accounting trick and it's not that he is copping the flak, it's likely his idea. Of course a loss counts against profit and therefore tax bill is lower. Not only that, but how can you not beat last years profits next year and look good. That is how it always works. New guy comes in, makes some bad write offs in every company, previous management take the hit, and from there on in he is set to year on year get growth. Not much news there.

  11. Danny 5
    FAIL

    Killing off Lumia

    With Microsoft apparently wanting to kill off the entire Lumia brand and Nokia ramping up to start making phones again, i think Microsoft better make sure Nokia will create windows phones again, because for most people, Nokia was one of the main reasons to take on a windows phone.

    If Nokia comes back and starts making Android phones, i will switch. I don't really like Android, but i love Nokia enough to remain with them.

    The purchase of Nokia's mobile department may not have been a great move for the shareholders, it wás a great move for Microsoft, the shareholders just aren't giving it the time it needs to mature.

    Imho, Microsoft is alienating a lot of customers with their current behavior.

    1. Dan 55 Silver badge

      Re: Killing off Lumia

      Why on earth would Nokia make WP after how well it went for them last time?

      1. Danny 5

        Re: Killing off Lumia

        Yeah, that was sorta my point. There's no way in hell that Nokia is going to make WP devices anymore and i'm pretty sure Microsoft will pay for that. The success of windows 10 is going to hinge severely on the uptake on mobile platforms, because the desktop platform is dying. If Microsoft cannot come up with a solid partner to flog WP devices, where's MS going to go?

        I know that from a short term business point of view it probably makes sense to drop mobile devices, but from (my personal) long term perspective, they're going to run themselves into the ground like this.

        I like WP, i have a Lumia and i think it's the best OS out there (not as limited as IOS, not as cluttered and insecure as android), but if Nokia comes back with Android (which is what i expect), I will be moving to them.

        1. Missing Semicolon Silver badge
          WTF?

          "Nokia"?

          @Danny 5

          There is no "Nokia". There is Microsoft's handset division. If they can't make a go of selling WP phones, they will simply. Flush. It. All .Away.

          Yeah.

          1. Pookietoo

            Re: There is no "Nokia"

            You think the company disappeared because they sold their phone division? When they sold to MSFT they agreed not to make phones for a couple of years, they're apparently gearing up to make them again now. All they have to do is buy Jolla and they're ready to go. :-)

  12. druck Silver badge
    Flame

    Write down

    What no one has mentioned is the write down means that in less than a year Microsoft has destroyed every cent of value in the Nokia phones business, as they are writing off the entire $7.5bn they paid for it. This beats their previous record flop aquiring Aquantive where it took a couple of years to destroy the entire $6.3bn.

    The only thing that can destroy value faster than Microsoft is a natural disaster.

    1. Tom 13

      Re: Write down

      Everyone always assumed that was more or less what was going to happen when monkey boy put his man in at Nokia.

      No, it never made sense to us either, but there it is.

  13. x 7

    so how much will these losses / writeoffs help in their attempts to avoid paying the US taxman?

    Could it be that faced with an upcoming crunch date in court, Microsoft purchased the biggest loss-making tech company it could find, with a view to closing and writing it off, creating a massive loss it could offset against backdated tax?

    I used to work for a USA chemical company which did this in profitable years - it would purchase the worst dog it could find on the USA stock market, and then write it off

    1. x 7

      apologies for the split infinitive there, I was typing in a hurry

  14. Tom 13

    hasn't returned to the kind of growth that investors would like to see

    And it is doubtful they ever will.

    Investors want to see the kind of growth MS saw in the 90s. That isn't going to happen. The computer industry then was young and taking over the world. Now that they've conquered it, we're down to maintenance and the revenues you can generate from that.

    This is MS's Michael Dell moment. Do they recognize the change in their market? Do they make changes that allow them to survive it and be profitable (even if it doesn't match the level "investors want"), or do they miss it and become another artifact of history?

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