Microsoft announced a loss of $2.1 billion on revenue of $22.2 billion for its second-quarter, the company's biggest quarterly loss ever. The large loss is the result of the one-off write down of the assets Microsoft acquired from Nokia in 2013, this non-cash impairment charge impacted the results by $7.5 billion.
The results were also negatively impacted by a $780 restructuring charge related to the same Nokia business, as well as a $160 million charge for the previously announced integration and restructuring plan. In total, these one-time items totaled $8.4 billion and impacted earnings per share (EPS) by $1.02 per share.
Microsoft Corp. today announced that revenues for the quarter ended June 30, 2015 were $22.2 billion. Gross margin, operating loss, and loss per share for the quarter were $14.7 billion, $(2.1) billion, and $(0.40) per share, respectively.
These results include the impact of a $7.5 billion non-cash impairment charge related to assets associated with the acquisition of the Nokia Devices and Services (NDS) business, in addition to a restructuring charge of $780 million. There was also a charge of $160 million related to the previously announced integration and restructuring plan. Combined, these items totaled $8.4 billion or a $1.02 per share negative impact. Excluding this impact, operating income and EPS would have been $6.4 billion and $0.62, respectively.
During the quarter, Microsoft returned $6.7 billion to shareholders in the form of share repurchases and dividends.
Revenue was $22.2 billion, down 5% year-over-year. Revenue included an unfavorable foreign currency impact of approximately 3%.
Gross margin was $14.7 billion, down 7% year-over-year. Gross margin included an unfavorable foreign currency impact of approximately 4%.
Operating loss was $2.1 billion, compared to operating income of $6.5 billion in the prior year. Operating loss included $8.4 billion of impairment, integration, and restructuring expenses. Non-GAAP operating income was $6.4 billion, down 3% year-over-year, including an adjustment for impairment, integration, and restructuring expenses as described in the Non-GAAP reconciliation above.
EPS was $(0.40), compared to $0.55 in the prior year. EPS was negatively impacted by impairment, integration, and restructuring expenses. Non-GAAP EPS was $0.62, and grew 11% year-over-year, including an adjustment for impairment, integration, and restructuring expenses as described in the Non-GAAP reconciliation above.
Analysts polled by Thomson Reuters expected Microsoft to post revenue of $22.03 billion and earnings per share of 56 cents, excluding one-time items, so the software giant beat both on revenue and profit expectations.
Looking into Microsoft's product segments, the total revenue in the firm's devices and consumer division decreased 13 percent, primarily due to lower Phone hardware, Windows OEM, Windows Phone and Office consumer revenue. Windows OEM revenue was down 22 percent due to poor business PC sales and benefits realized from the expiration of Windows XP support in the prior year. Windows Phone revenue collapsed 68 percent and Office Consumer revenue was down 42 percent due to declines in the consumer PC market. Phone Hardware sales also suffered hard as revenue was down 38 percent due to lower price points and lower volumes.
On the bright side, Surface revenue soared 117 percent to $888 million and Xbox Platform revenue rose 10 percent. Additionally, the Xbox Live transactions revenue, search ad revenue, first-party video game revenue, and Office 365 Consumer revenue all saw nice revenue increases.
Commercial licensing was down 7 percent, primarily due to a decline of Office commercial revenue, which dropped 18 percent due to a shift towards Office 365 and lower license volume. Commercial Cloud revenue on the other hand soared 88 percent to $832 million.