Nokia's mistake leaves scar on Microsoft: biggest quarterly loss in history

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Microsoft has released its financial results for the second natural quarter (the company's fourth fiscal quarter). According to reports, Microsoft suffered its largest quarterly loss in history due to the "blunder" of acquiring Nokia's mobile phone business.

In the second quarter, Microsoft reported a net loss of $3.2 billion. In comparison, in the same period last year, Microsoft made a profit of $4.6 billion. According to ZDNET, a US technology news website, the second quarter saw the largest quarterly loss in Microsoft's history.

As we all know, Microsoft previously announced a major asset write-down on its mobile phone business, and the huge losses in the second quarter were mainly due to this asset write-down.

Microsoft's financial report showed that the total cost of restructuring and impairment of its mobile business was $8.4 billion, including $7.6 billion in asset write-downs and other layoffs costs.

Last April, Microsoft completed its acquisition of Finland's Nokia's mobile phone business for a total of $8 billion (the total purchase price was $9.5 billion, but Nokia had $1.5 billion in cash on its books).

In other words, Microsoft has already defined the acquired Nokia mobile phone business as "worthless". Microsoft will formulate a new strategy and seek a place in the smartphone market in a niche way.

Through this acquisition, a total of 25,000 Nokia employees joined Microsoft. According to Tencent Technology's earlier calculations, 20,000 Nokia employees have been laid off in the two layoffs, accounting for 80% of all employees.

Microsoft said that if the asset write-down and restructuring costs of its mobile phone business were not taken into account, its earnings per share in the second quarter would actually be 62 cents, which is reported to have exceeded the Wall Street analysts' expectations of 58 cents per share.

The huge losses caused by the restructuring of its mobile phone business were already expected by the market, and Microsoft's stock did not experience a surprising plunge after the financial report was released on Tuesday.

In the second quarter, due to the weak personal computer market and the increase in Windows 7 sales caused by the discontinuation of support for the XP system in the same period last year, Microsoft's Windows software revenue fell 22% in the quarter, which was a larger drop than the decline in computer industry revenue.

Despite a major restructuring of its mobile phone business, Microsoft has not decided to give up on this market.

Microsoft will adopt a strategy of selling blockbuster phones in the future, focusing on the business phones, cheap phones and Windows high-end flagship phones. It is expected that the number of new phones launched each year will not exceed six.

Due to the significant contraction of the mobile phone business, some Wall Street analysts pointed out that the global market share of Windows phones will soon drop from 2.5% to near zero, and Microsoft will repeat the BlackBerry incident. Microsoft executives have also placed their software mobile strategy on Android and Apple phones.