IT’S BEEN A rough quarter for Microsoft. The company took a $7.5 billion write-down in its latest quarterly earning report today after conceding earlier this month that its acquisition of Nokia’s handset business wasn’t going to turn it into a viable competitor in the smartphone market. Microsoft CEO Satya Nadella’s decision to refocus his company’s priorities led to massive layoffs. But it also appears to be leading to growth in the areas where Microsoft sees its future.
The Nokia boondoggle—former CEO Steve Ballmer’s parting gift to Nadella—led to what Bloomberg called the company’s biggest quarterly loss ever. Understandably, then, Nadella chose to focus on the future instead of that dismal moment now officially in its past during his earnings call with analysts today. He promised a more focused approach not just to mobile but to the rest of Microsoft as well. “Business process, collaboration, communications, these category boundaries are things I believe are going to change,” he said.
Nadella talked up the acquisition of field service software company FieldOne; the launch of the Cortana Analytics Suite; and the company’s plans to reach $20 billion in cloud computing revenue in 2018. And of course Windows 10 is just days away from launch.
“While the PC ecosystem has been under pressure recently, I do believe that Windows 10 will broaden our economic opportunities and return Windows to growth,” Nadella said.
Other opportunities Microsoft has sought to seize are starting to yield results. Not counting the Nokia write-down, Microsoft actually beat analyst projections for the previous quarter. The company saw solid growth in cloud services, search (21 percent revenue growth), and Xbox (27 percent revenue growth). Azure, Office 365, and the Microsoft Dynamics cloud enterprise software line also all saw at least double-digit revenue increases.
Microsoft’s historic cash cow Office is meanwhile making a smooth transition to to the cross-platform mobile and cloud world with 150 million downloads of Office Mobile for iOS and Android. Nadella said that 50,000 new small and medium businesses adopt Office 365 per month and that the service is already in use at four out of five of the Fortune 500.
Ultimately, it seems that if Microsoft can keep convincing the world that it’s a new company with new priorities and new products worth buying, the worst could be over for a company with a starkly uncertain future when Nadella took the helm. Yet not everything from the Ballmer era resulted in bad news. The Surface tablet, Microsoft’s would-be iPad competitor, saw 117 percent revenue growth.
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