From Microsoft's Q3 fiscal 2016 earnings report, Microsoft Surface Pro 4 and Surface Book devices have led to a 61 percent increase in sales, with surface-related revenue hitting a total of $1.1 billion. However, Lumia devices have failed to propel the company's profits to the expectations.
According to The Verge, Microsoft sold only 2.3 million Lumia devices in Q3 compared to 8.6 million sales for the same period in its last fiscal year. This is a 73 percent drop in sales that translates to a 46 percent drop in Microsoft's phone-related revenue.
It is believed that Microsoft has retrenched from manufacturing Lumia devices over the last half a year, and so, this could be one of the reasons why Lumia's performance has failed to a large degree. According to statistics, the number of Lumias that are getting sold per month currently is only 750,000.
A graph of Windows phone sales of the last four quarters plotted at MS Power User indicates that, if the trend line continues to depict the same rate of decline, Lumia sales could hit the zero mark in less than two quarters. The decline is expected to continue since Microsoft has not reported any plans of unveiling a new device this year.
Microsoft has itself admitted that Lumia sales to end users are also low, with store inventory levels being high, and hence the predicted steepening of the revenue loss. The common refrain in the market is that Windows Phone is typically dead.
All the same, in Q3, Microsoft has still managed to make $3.8 billion worth of net profit on $20.5 billion of overall revenue. These figures are down from the ones reported from the same period in its last financial year. According to financial analysts, the figures did not please Wall Street investors as the figures fell short of their expectations.
Microsoft corporation executives are now directing the blame to higher-than-expected taxes for its profit cuts. Reports indicate that income tax expenses had an adjustment due to the alteration of the geographic mix and, resultantly, the company's GAAP tax ended up being 25 percent.
Here is video report of Microsoft's Q3 earnings: