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Microsoft hits $23.4 billion revenue in Q4, earnings share decreasing

updated 05:38 pm EDT, Tue July 22, 2014

Expected profits fall shy of expectations, Nokia deal responsible for $0.08 EPS hit

Microsoft released its quarterly revenue figures for the end of the 2014 fiscal year, revealing that the company pulled in $23.38 billion in revenues for the fourth quarter. While the revenue numbers beat the expectations of $23 billion, earnings per share (EPS) missed the mark at $0.55 per share. Experts polled by Thomson Reuters expected the software company to hit $0.60 EPS based on the $23 billion in revenues.

"We are galvanized around our core as a productivity and platform company for the mobile-first and cloud-first world, and we are driving growth with disciplined decisions, bold innovation and focused execution," said Microsoft CEO Satya Nadella.

Overall revenue is up 18 percent from the previous year, compared to $19.89 billion in 2013. Gross margin improved by 10 percent, hitting $15.78 billion for the quarter, compared to $14.29 billion for the fourth quarter of 2013.

Operating income increased compared to the previous year, hitting $6.48 billion. This displayed a seven percent increase over the $6.07 billion operating income seen in fiscal year 2013. Net income for the Microsoft totaled $4.6 billion, a decrease of approximately seven percent from quarter four for the 2013 fiscal year. EPS was also lower in 2014, dropping $0.04 year-to-year.

The numbers for the quarter ending June 30 largely place the acquisition of Nokia in the spotlight for Microsoft's failure to meet expectations. Acquiring the hardware business of Nokia helped the company hit $1.99 billion in revenues for the quarter, but the company saw a loss of $692 million in operating income. The result was a dilution of EPS by $0.08. Had Microsoft not made a $7 billion purchase for the handset company, it may have hit the expected earning numbers.

However, the decrease in EPS doesn't necessarily paint a bleak picture for Microsoft. Compared to last year, all but one area of segment revenues are up, including computing and gaming hardware, commercial licensing and devices and consumer licensing. Looking at the twelve month numbers, only devices and consumer licensing haven't beat revenues from 2013.

Microsoft states that it has sold 5.8 million Lumina smartphones, with an additional 30.3 million non-Lumina phones since the acquisition of Nokia. The Surface tablet brought in revenues of $409 million. The Xbox division saw a revenue increase of $104 million, an increase of 14 percent. Total revenues for the consumer segment increased 42 percent to $2.98 billion.

The main segments for Microsoft, device and consumer licensing and commercial licensing, both increased year-to-year. Device and consumer licensing revenues were up nine percent, an increase of $406 million. Microsoft mentions that this is due in part to business preferring Windows and the end of life for Windows XP. Commercial business revenue was up $1.28 billion, or 11 percent, from 2013. An increase in commercial licensing was responsible for $595 million, while other commercial revenue contributed $688 million.

by MacNN Staff



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