Microsoft warns of a possible and massive future write-off due to Nokia devices acquisition

Microsoft may be forced to take a large one-fourth dimension financial charge in the near future due to its acquisition of Nokia'southward Devices and Services division in April 2022. Microsoft bought the division, which makes its Lumia smartphones, for $seven.3 billion.

Microsoft quietly made that rather major revelation in its report on their 2022 financial third quarter results that was filed last week to the US Securities and Commutation Committee. It noted that revenues from the phone hardware partitioning from that quarter came in at $1.four billion, versus its costs of $four one thousand thousand Equally noted first by Computerworld, this ways Microsoft actually lost 12 cents for each of the phones the visitor sold during that flow.

Microsoft said that the phone partition "is at an elevated hazard of impairment" and added:

"Declines in expected time to come cash flows, reduction in future unit volume growth rates, or an increase in the take chances-adjusted discount charge per unit used to estimate the off-white value of the Phone Hardware reporting unit of measurement may outcome in a determination that an impairment adjustment is required, resulting in a potentially fabric accuse to earnings."

Microsoft has already said it has plans to reduce costs in its phone hardware division, just has not given whatever specifics.

This would not be the kickoff time Microsoft would have to accept a huge 1-fourth dimension charge based on the acquisition of a company. In 2022, Microsoft took a $six.ii billion writeoff in its fiscal fourth quarter of that twelvemonth, in club to bargain with the costs of buying the online ad company aQuantive in 2007, which did not perform as expected. Microsoft recorded a cyberspace income loss of $492 one thousand thousand for that particular quarter, due mostly to that aQuantive 1-time charge.

Source: SEC.gov; Via: Computerworld

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