Nokia losses underline Microsoft’s decision to slim down phone division

Microsoft reported a 7 per cent drop in profits in its last quarter as it was impacted by losses made by its Nokia division, underlining the company’s decision to make the biggest round of job cuts in its history.

Nokia Lumia 930
Nokia’s latest marketing campaign, for the Lumia 930.

Revenues rose 17 per cent year on year to $23.38bn in the three months to 30 June, slightly above analysts’ estimates. Profits dipped to $4.61bn as it felt the impact of the $692m operating loss posted by the struggling Nokia division.

The company sold 5.8 million Lumia smartphones and 30.3 million non-Lumia phones following the completion of the Nokia devices and services business. However, low price point phones drove the majority of the Lumia-branded smartphone volumes.

Microsoft chief executive Satya Nadella said the company will look to differentiate its smartphone offering going forward by highlighting productivity and “digital work and life” scenarios.

Last week Nadella announced the company is to make 18,000 job cuts, 12,500 of which will come from the Nokia devices and services business, as the company seeks “strategic alignment” across the business.

The swingeing round of redundancies is reported to affect marketing, engineering and other roles where there is overlap within the Microsoft business as the company looks to make more than $1bn in annual cost savings by 2016.

Elsewhere Apple reported revenue up 6 per cent year on year to $37bn, while profit rose 11.6 per cent $7.7bn, in the three months to 28 June. The company said its record quarter was fuelled by strong sales of the iPhone and Macs.

Apple CEO Tim Cook also added that the company has “other new products and services [it] can’t wait to introduce”.