Microsoft’s Lumia and Surface Businesses Improve, But Fiscal Q3 Profit Declines

Microsoft’s Lumia and Surface Businesses Improve, But Fiscal Q3 Profit DeclinesMicrosoft, Corp. (NASDAQ: MSFT) released yesterday its financial report for the March ending, or third fiscal quarter of 2015, and the Redmond company reported $4.98 billion in net income and a revenue of $21.7 billion, representing a drop of 12 percent and an increase of 6 percent respectively from the year-ago March quarter.

According to Microsoft, its fiscal Q3 2015 financials include $190 million worth of expenses related to its acquisition of Nokia’s phone business. Still, the company’s Surface tablet and Lumia phone businesses showed some marked improvement in the March quarter, amid continued growth in the cloud segment. The latter variable has been a major focus for Microsoft Chief Executive Satya Nadella, and may also be an important part of next week’s Build developers expo.

Revenue related to Microsoft’s Surface business was at $713 million in fiscal quarter three of 2015, an increase of 44 percent year-over-year. Microsoft does not disclose Surface sales figures, but this increase in revenue shows that the company’s so-called “crossover” device – a cross between a tablet and a notebook – is finally gaining some traction and being adopted by more consumers.

Microsoft’s console gaming business was down slightly in the third fiscal quarter of 2015. The company sold 1.6 million Xbox consoles last quarter, down from the previous third fiscal quarter’s total of 2.0 million consoles. Revenue was down 24 percent year-over-year, with the main drivers of decline being a 20 percent decrease in console volume and cheaper Xbox One pricing. Sony’s PlayStation 4 remains ahead of the Xbox One in current-generation console sales, though there were exceptions, such as in the holiday quarter of 2014, when Microsoft was ahead of Sony.

Microsoft shares ended Thursday trading at $43.34, a modest increase of $0.35 (0.83 percent) over the previous day.