Microsoft Closes Nokia Acquisition
Microsoft has acquired almost all of the Nokia devices and services segments, as well as an agreement to license patents from Nokia, and to license the HERE mapping technology.
Nokia’s devices and services will now be known as Microsoft Mobile Oy (Oy being a Finnish abbreviation of Osakeyhtiö which translates to Limited company ala Wikipedia) and for the time being, Microsoft Mobile Oy will be run as a subsidiary of Microsoft.
Though the final price was not officially announced yet, it is expected to be slightly higher than the $7.2 billion originally announced. As part of the deal, Microsoft now employs about 25,000 former Nokia employees, as well as owning most of Nokia’s manufacturing. Several of the plants did not transfer ownership due to various factors – the manufacturing facility in India which employs 7500 workers is subject to an asset freeze over ongoing taxation proceedings and therefore will still be owned by Nokia but a service agreement has been reached with Microsoft to allow them to keep the plant active. Also, one plant in Korea which employs about 200 people will close rather than transfer.
Former Nokia CEO Stephen Elop will now report to Satya Nadella as executive vice president of the Microsoft Devices Group – now expanded to include Lumia smartphones, Nokia mobile phones, and the recently forked ASOP versions of the Nokia X phones in addition to Xbox hardware, Surface, Perceptive Pixel products and accessories.
What this brings to Microsoft is quite a lot of experience in building not only mobile device hardware, but also software and imaging. It’s been clear to see the influence Nokia had on Windows Phone since they initially signed on as exclusive partners in 2011. Obviously the hope by Microsoft is that bringing this experience tighter into the organization will allow them to add features at a quicker pace.
Also the manufacturing component is something that Microsoft as a software company has never had direct control over, and it may help them in other areas with the move to a devices and services company last year. Surface 2, for example, has been in short supply and while it’s far too early for Microsoft to move production of their own products to the former Nokia manufacturing facilities, it is possible they can leverage that for future products.
Steve Ballmer announced that Microsoft was moving from being a traditional software company to a Devices and Services focus, and with this acquisition, they have fleshed out the devices side. Now they need to execute that strategy and try to kick start their mobile efforts which have struggled in the marketplace so far.
Source: Microsoft, Nokia
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Microsoft Q3 2014 Financial Results
Overall GAAP revenue was down less than 1% over Q3 2013 at $20.403B, with Non-GAAP revenue up 8% due to Windows Upgrades, Office Deferral, and Video Game Deferral last year bringing down the Non-GAAP revenue last year.
GAAP Gross Margin also fell 8% at $14.462B as compared to $15.702B last year, but Non-GAAP was up 3% due to the same deferrals.
Operating income was down 8% as well year over year, and Earnings Per Share were down 6% at $0.68 per share.
Microsoft Q3 2014 Financial Results (GAAP) |
|||||
Q3'2014 |
Q2'2014 |
Q3'2013 |
|||
Revenue |
$20.403B |
$24.519B |
$20.489B |
||
Operating Income |
$6.974B |
$7.969B |
$7.612B |
||
Margins |
70.8% |
66.2% |
76.6% |
||
Office Consumer revenue was up 15% for the quarter. This refers to the full license of Office, and not the subscription based Office 365 Home.
Even with the increases in revenue, Gross Margin was down about 1% year over year for this group.
On the consumer hardware side, there was a large revenue gain of 41%, with Xbox platform revenue up 45%. 1.2 million Xbox One consoles, and 800,000 Xbox 360s were sold in the quarter. Surface revenue was also up more than 50% with Surface revenue now at almost $500 million for the quarter however no actual device sales numbers were announced.
Once again, even though revenue was up, Gross Margin was down 34% which was attributed to the increase in Xbox One console sales and their high BoM.
The final piece of the Devices and Consumer group is the aptly named “Other” category, which includes Office 365 Home, Bing, and Xbox Live revenues. This group was up 18% in revenue over Q3 2013 driven by strong subscriptions for Office 365 Home – now at 4.4 million subscribers and up 1 million for the quarter. Bing search advertising revenue was also up 38%, and Xbox Live revenue was up 17% contributing to the strong increase for this business segment, and unlike the other Consumer lines, Gross Margin was also up 26%.
On the Commercial side, Microsoft announced a 7% increase in revenue and 6% increase in Gross Margin which came from a slight increase in Commercial Licensing at 3%, and a 31% increase in the cloud services of Office 365 and Azure which had 100% and 150% revenue gains for the quarter. Microsoft’s commercial cloud services fall into the Commercial “other” category.
Microsoft Q3 2014 Segment Overview |
|||||
Q3'2014 |
Q2'2014 |
Q3'2013 |
Revenue for quarter |
||
D&C Licensing |
$4.38B |
$5.38B |
$4.35B |
21.3% |
|
D&C Hardware |
$1.97B |
$4.73B |
$1.40B |
9.5% |
|
D&C Other |
$1.95B |
$1.79B |
$1.66B |
9.4% |
|
Commercial Licensing |
$10.32B |
$10.89B |
N/A |
50.5% |
|
Commercial Other |
$1.90B |
$1.78B |
N/A |
9.3% |
|
Also in commercial, Microsoft announced that around 90% of enterprise desktops worldwide are now running Windows 7 or 8 which is impressive considering how many were running XP not very long ago.
Corporate Vice President and CFO Amy Hood also stated that the Nokia acquisition will close Friday April 25 which was four months later than they initially expected. Once completed, all of Nokia’s assets will fall under the Devices and Consumer lines, with license and platform payments falling under the D&C Licensing, and Nokia Devices and Services falling under D&C Hardware.
Overall, strong results in the Commercial segment and great demand for Microsoft cloud services such as Office 365 and Azure were not enough to overcome the consumer segments with Xbox One and Surface margins pulling down the overall result. Xbox One sales are obviously razor thin on margins at the moment which is not unexpected in a new console, and Surface sales are still very low. Next quarter should be interesting to see how the Nokia acquisition fits in, and to see if any headway can be made in the Consumer Hardware segment.
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Samsung Galaxy Beam 2 Revealed on Samsung China Website
The phone sold well enough to warrant an updated version which was revealed at MWC 2012. The updated Galaxy Beam i8530 launched with Android 2.3.6 and packed a NovaThor U8500 CPU with two 1GHz Cortex-A9 cores, 786MB of RAM, and a Mali-400 MP GPU. Today it seems Samsung has introduced another device into its Galaxy Beam lineup and based on its frequency support and Samsung’s images it’s destined for China Mobile’s TD-SCDMA network.
Detailed specifications are not yet posted but according to Samsung’s webpage the device sports a 4.66” WVGA LCD display and a quad core 1.2GHz processor with support for 802.11 b/g/n at 2.4GHz and Bluetooth 4.0. Other specifications include MicroSD support up to 64GB, a 2600mAh battery, and Android 4.2 Jelly Bean. On the outside the device sports a metallic looking plastic build that is reminiscent of the Samsung ATIV S Windows Phone.
The site doesn’t list the China launch date and currently there is no information about a wider release. With this sort of niche device it may never see one. However, Samsung seems confident that it is the type of device that can sell in the Chinese market. There is definitely appeal to being able to project photos, videos, and webpages for everyone to see rather than huddling around a tiny device.
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Corsair RM1000 Power Supply Review
Corsair has a good reputation for their PSUs, and today they are among the most popular choices for gamers and enthusiasts. The RM1000 is the first PSU from Corsair to find its way into our new testing lab, and it's an 80 Plus Gold Certified unit with a rated output of 1000W at 40°C ambient. Given the rated power output and $170 retail price, the RM1000 targets demanding users and gamers, and a simple 80 Plus Gold certification only goes so far. Read on for our full review as we see what else the RM1000 has to offer.
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QNIX QX2710 LED DPmulti True10 Review
The best thing to happen to the computer monitor marketplace has been the introduction of inexpensive QuadHD displays from South Korea. At a time when a $700 monitor was considered cheap in the United States, these were available on Ebay for around $300 and utilized the same panel, though often a lower grade one. The introduction of these displays forced mainstream vendors in the USA to introduce more affordable models, and saw other vendors introduce more affordable products as well. Now we have decent quality panels at far more affordable prices, and while not perfect they can provide a good overall value. Today we look at the QNIX QX2710 LED DPmulti True10 and see how it compares to other 27-inch displays.
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SpaceX Files Protest Against U.S. Air Force Space Launch Monopoly
SpaceX CEO Elon Musk wants to break up a space 'monopoly' in which the U.S. Air Force relies on Boeing and Lockheed Martin to launch military craft into space
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Apple, Google, Adobe, and Intel Pay $324M to Settle Salary Conspiracy Case
Settlement is the largest employment lawsuit in the U.S. tech sector
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Google Considers Wi-Fi For All Cities With Google Fiber Service
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Nissan Testing "Self-Cleaning" Car Through the Use of Oleophobic Paint
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Microsoft Now Officially Owns Nokia Devices
Nokia appears free to return as an Android or Windows Phone maker in 2016
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UPDATE: FTC Backs Up Tesla, Says States Shouldn’t Block Direct Auto Sales
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4/25/2014 Hardware Reviews
DailyTech's roundup reviews from around the web for Friday
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Qualcomm, Samsung Slump on Mixed Earnings, but ARM Rises Above
Chip licenser was the clearest winner in the mobile sector with an impressive performance, as usual
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iPad Sales Shrink, Apple CEO Chides Hybrid Tablets, Android, and Microsoft
Tim Cook offers many interesting theories as to why the tablet market is growing, but iPad sales are shrinking
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150M Android Apps Still Susceptible to Heartbleed
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Amazon Prime Pantry Will Deliver 45 lbs of Groceries to Your Door for $5.99 S&H Fee
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As Sales Level in the U.S., Tesla Model S Charges Ahead in Europe, China
On the horizon await the Model X luxury SU-EV and the Model E mass market vehicle, the keys to Tesla's future
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