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Microsoft Reports Dropping Revenues for Q1 FY2016

Revenues are down 12 percent year on year, it says

Oct 23, 2015 05:53 GMT  ·  By
Microsoft says it had strong performance in this quarter, despite the drop
   Microsoft says it had strong performance in this quarter, despite the drop

Microsoft's revenues dropped 12 percent year on year in the first quarter of fiscal year 2016, as the Redmond-based software giant experienced declines in several product categories.

Revenues and income totaled $20.4 billion and $5.8 billion for Q1 FY2016, while net income came in at $4.6 billion, which is actually an increase of 2 percent as compared to the same period the year before. The net income fell 1 percent.

Specifically, the phone revenue dropped 54 percent because of what Microsoft calls its “updated strategy.” Redmond is currently in the process of overhauling its mobile strategy, planning to focus on just three different device categories, namely value phones, mid-range devices, and flagships.

Surface and Windows revenues down

The Surface revenue also dropped year over year, the company revealed, decreasing from $908 million in the same quarter the year before to $672 million this year. This is most likely caused by the lack of new models, but revenues should go up again this year thanks to the arrival of Surface Pro 4 and Surface Book.

Windows OEM revenue also declined by 6 percent, while the search business increased by 29 percent, which is living proof that Microsoft's commitment to the search business is going in the right direction.

CEO Satya Nadella claims the company is still performing strong in the current market and expects figures to increase in the next quarter thanks to the arrival of Windows 10 and new devices.

"We are making strong progress across each of our three ambitions by delivering innovation people love," said Satya Nadella, chief executive officer at Microsoft. “Customer excitement for new devices, Windows 10, Office 365 and Azure is increasing as we bring together the best Microsoft experiences to empower people to achieve more."

Amy Hood, executive vice president and chief financial officer of Microsoft, says the company is actually “pleased” with the operating results this quarter, while Kevin Turner, chief operating officer, claims the business strategy is already paying off because more enterprises go for their own cloud, mobile device management technologies, and data analytics solutions.