Microsoft weighed down by ailing Nokia

July 23, 2014: 9:31 AM ET
Apple & Microsoft: Both kicking butt
NEW YORK (CNNMoney)

It's going to take more than layoffs for Microsoft to fix Nokia.

Microsoft (MSFT, Tech30) said Tuesday that Nokia's devices and services business, which Microsoft acquired April 25, lost a stunning $692 million between that date and June 30, the end of the company's most recent quarter.

That loss includes some non-recurring expenses, but Nokia is clearly an unhealthy business.

Microsoft is in the midst of a transition led by new CEO Satya Nadella, who announced plans last week to cut 18,000 jobs within the next year, or about 14% of the company. Most of those layoffs -- about 12,500 -- will come from Nokia. In a memo to Microsoft staff, Nadella said that Microsoft found many redundancies between the two companies, including both professional and factory workers.

Nadella's task now is to figure out how to make Nokia devices running Windows Phone software competitive in a sector dominated by Apple's iOS and Google's Android. He recently announced plans to kill off Nokia's short-lived "Nokia X" Android smartphone experiment.

Microsoft's Nadella swings the ax

Other parts of Microsoft's business are healthier, with search advertising revenue from Bing growing 40% versus a year prior and subscriptions to the company's Office 365 software rising by 1 million to more than 5.6 million. Sales of Windows software to manufacturers rose 3%, a positive sign after years of weak PC sales.

Overall, Microsoft's sales totaled $23.3 billion, ahead of Wall Street expectations, sending shares up slightly in after-hours trading.

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