It is that time of the year where companies would have to report their earnings for the past quarter to review their performance so far in the year. Microsoft, as one of the largest technological giants would definitely have to publicize the reports. The thing is Microsoft has been struggling with shrinking revenues and threats of loss due to their lacking performance last year. This year too Microsoft have spent quite a bit purchasing Nokia so how will their reports turn out?
It turns out that Microsoft in the past quarter this year has been showing some improvement through the year. For one, thanks to their acquisition of Nokia now they have control over the Lumia brand and its smartphone sales. From there we actually see an improvement compared to last year and the quarters before. This quarter 9.3 million units of Lumia smartphone compared to 8.8 million units last year.
The Microsoft Surface Pro 3 that was introduced earlier this year as well is proven to shows some improvement in sales numbers too. In fact as reported by Microsoft the improvement of sales is due to “strong interests” from all types of users, which is actually a good thing. We think the Surface Pro 3 is a largely potent device and deserve some interest in spite of the steep pricing. These improvements lead to a revenue of $908 million (RM3 billion) in the third quarter from the sales of the Surface alone whilst gross profits from the sales of phones are $480 million (Rm1.6 billion).
So it does seem like Microsoft is hopping back into shape again but it is not all good news. Microsoft has always been known for its software superiority and its core business is definitely software licensing. Despite that their performance for that segment fell by 46% this quarter. That is though because Microsoft is now keeping the licensing costs low for manufacturers to ensure that their budget smartphones stay in the budget range and of course drive sales numbers.
The final numbers stands now at $23.2 billion (RM76.1 billion) in revenue, in which $10.96 billion (RM36 billion) coming from devices and consumer division and $12.28 billion (RM40.27 billion) from its commercial division. With the third quarter wrapped up on a good note for Microsoft they are looking to improve as well for the rest of the year with the early forecast.
Microsoft had some tough years behind them and they are about to get through some rough competition in the future that is for sure. But with the improvements that Microsoft shows we can be sure that they are getting themselves on firm feet to compete. We really like Microsoft if we are honest so we would really like to see them swing back into action and again be on top of their game.