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Microsoft CEO Sees 'Bold' Plan as 4Q Tops Street
Microsoft CEO Sees 'Bold' Plan as 4Q Tops Street
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PUBLISHED:
JULY
24
2014


Microsoft Corp. CEO Satya Nadella painted an upbeat vision of the future Tuesday, saying that the next version of Windows will be unified across screens of all sizes and that two money-losing units -- Nokia phones and Bing search -- would become profitable in 2016.

The agenda, announced Tuesday as Microsoft reported fourth-quarter earnings that beat Wall Street expectations, helped boost the company's shares, which added 52 cents, or 1.2 percent, to $45.35 in after-hours trading.

Five months after taking the reins from Steve Ballmer, Nadella further outlined how the software company would be acting differently under his watch.

"I hope you can see that we have bold ambitions and we have made a lot of progress," Nadella said.

His comments followed the announcement last week that the company is cutting 18,000 people -- mostly related to the $7.3 billion purchase of Nokia's smartphone unit in April.

Eliminating overlap related to the deal is expected to save $1 billion annually, the company said Tuesday, higher than the $600 million in savings it estimated in September when it announced the acquisition.

On a conference call with investors, Nadella also acknowledged the headache the company had created for software developers by making multiple versions of Windows that work differently on phones, PCs and tablets, Xbox and other devices. The company is aiming to simplify that so developers can create apps that work on many devices at once.

"We are bringing teams together to approach Windows as one equal system -- very different than we ourselves have done in the past," he said.

Kirk Materne, an analyst with Evercore Partners, welcomed the direction, and noted that the company trimmed operating expenses when excluding the Nokia acquisition.

The result "further highlights the fact that Microsoft is taking a disciplined stand on spending, which is something investors have been looking for a while," Materne said.

For the fourth quarter through June 30, earnings took a hit from the money-losing Nokia devices business, but growth in Internet-based computing services to businesses boosted results.

Net income fell 7 percent to $4.61 billion, or 55 cents per share, from $4.97 billion, or 59 cents per share, a year ago.

Losses at Nokia cut 8 cents per share from earnings. Microsoft lost another net 3 cents on restructuring and tax-related items. Excluding those items, earnings hit 66 cents per share, beating the 60 cents expected by analysts polled by FactSet.

Revenue rose 18 percent to $23.4 billion, although $2 billion came from the Nokia unit. That was slightly better than the $23 billion analysts were looking for. Excluding the acquisition, revenue would have risen 10 percent. (continued...)

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© 2014 Associated Press under contract with NewsEdge. All rights reserved.
 

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