World Economy

Microsoft, Apple Report Huge Losses

Microsoft, Apple Report Huge LossesMicrosoft, Apple Report Huge Losses

Microsoft early Wednesday reported its earnings for the fourth quarter of its 2015 fiscal year and unsurprisingly, the massive $7.6 billion write down for its Nokia purchase last year tanked any chances of it turning a profit.

The write down pushed Microsoft’s losses to $2.1 billion for the quarter. Excluding the write down and related charges, Microsoft’s other businesses earned a profit of $6.4 billion on $22.2 billion in revenue, The Verge reported.

The company notes that its revenue from Windows OEMs declined 22% due to cutting off support for Windows XP, but revenue from Microsoft’s own Surface line grew 117% to $888 million on the backs of strong sales of the Surface Pro 3 and newer Surface 3.

Microsoft’s smartphone business actually grew 10% year over year to 8.4 million units, but lower average selling prices led to a revenue decline of 68%. The Xbox division managed to expand sales by 30% to 1.4 million for the quarter, however.

In more positive news, Microsoft’s Office 365 subscriber base increased to 15 million, up nearly 3 million from the prior quarter. Margins also increased dramatically year over year, up to 26% from 17% for the same period last year.

  Apple Loses $62b in Minutes

Wall Street wasn’t particularly thrilled with Apple’s quarterly results on Wednesday morning. Shares dived by nearly 9%, wiping around $62 billion (A$84 billion) from its market value in a matter of minutes, after sales of iPhones underwhelmed and the impact of the much-heralded new Apple Watch failed to move the needle.

But Apple is still growing (revenue was up 45% year on year) at rates most companies would die for. And a little bit lost in the collective investor freak-out about this morning’s result is the fact that the tech giant’s cash stash is now above $200 billion (A$270 billion).

The tech colossus added another $9 billion to its vast position in cash and investments during the quarter, bringing that to $203 billion–more than the foreign reserves of countries like Germany, the UK, France, Canada and yes, Australia.  

Since Australia has one of the highest iPhone penetration rates in the world, it’s reasonable to assume it generated some of that money in the last quarter (and all those quarters before) by selling devices on these shores. Yet, as reporting by the likes of Fairfax Media’s Michael West and Neil Chenoweth has shown, Apple doesn’t pay much tax on its sales here, using notoriously complex schemes to shift its profits to lower taxing jurisdictions.