14 DAY TRIAL // Microsoft has just announced its financial results for Q4 of FY15, and just as expected, the Redmond-based company had huge losses.
On the smartphone business front, Microsoft confirmed that it had sold more smartphones in Q4 this year than the same period of 2014. However, overall revenue declined heavily due to Microsoft's shift to lower price point.
No less than 8.4 million Lumia smartphones were sold in Q4 FY15, which is a 10% increase over last year's sales when Microsoft reported only 7.5 million Lumia handsets were sold.
Still, the result of the increase was the fact that Microsoft only released affordable and mid-range Windows Phone device, which hurt the company's overall revenue.
Lack of flagship phones are the cause of declined revenue
Many companies don't gain that much on cheap smartphones and the same goes for Microsoft, as the company focused its lineup of Windows Phones on low-end handsets with small margins for profit.
Microsoft also announced that Windows Phone revenue decreased $552 million or 68%, mostly because of the $382 million of revenue recognized in the prior year at the conclusion of the commercial agreement with Nokia, and a decline in royalty revenue.
Also, the official report mentions Phone Hardware revenue decreased $748 million or 38%. Microsoft said that gross margin decreased $158 million, due to lower revenue, offset in part by a $590 million or 31% decrease in cost of revenue.
“We finished the fiscal year with solid progress against our strategic priorities, through strong execution and financial discipline, which is reflected in our results for the quarter and the year,” said Amy Hood, executive vice president and chief financial officer at Microsoft.
Microsoft is expected to get better results beginning this fall when the company will launch its first Windows Phone flagship smartphones in a long time.