Microsoft reveals 49% YoY drop in phone revenue in Q4 2015

The company only managed to sell 4.5 million Lumias in the last quarter, with revenues down 49 percent year on year.

Second-quarter adjusted revenue fell 2% year over year (up 3% in constant currency) to $25.7 billion, in line with our estimate, as Azure delivered triple-digit revenue gains. The company took in $23.8 billion in revenue, $6 billion in operating income, and $5 billion in net income for the quarter.

‘Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas, ‘ said Microsoft chief executive Satya Nadella.

Microsoft’s tablet range grew by 29% year-on-year, reaching $1.35 billion, Office 365 subscribers have hit 20.6 million, and Windows 10 reached 200 million devices in December.

‘Our commercial business executed well as our sales teams and partners helped customers realize the value of Microsoft’s cloud technologies’.

The better than expected results were driven mainly by Microsoft’s cloud services division, which reported a 5% year-on-year revenue hike to $6.3bn, accounting for more than a quarter of the company’s total revenue.

The company said it will provide financial outlook when it holds a conference call with analysts later on Thursday. Microsoft said it returned $6.5 billion to shareholders in the form of share repurchases and dividends during the quarter.

Microsoft just released its earnings report for the last quarter, and the major takeaway is that Windows Phone sales were beyond bleak, while Surface revenue performed pretty decently. Even with the recent issues in the stock market, Microsoft’s shares are up more than 28 percent compared to the last season, while shares in rivals like Apple, Oracle and IBM have declined by double digits.

The segment consisting of Windows, hardware, search, and gaming pulled in $12.7 billion in revenue, marking a decline of 5% year over year (down 2% in constant currency).

NPD Group analyst Stephen Baker said: “People who think Microsoft is sliding into irrelevancy really need to re-evaluate how they see the company”. While revenue from server based products rose by 10%, Azure revenue grew 140%. The company pulled in revenue of $25.7 billion in constant currency, and $0.78 earnings per share.