Microsoft released its Q2 financial report. Thanks in part to its previously-announced phone hardware business restructuring, the company has posted a $2.1 billion loss. A $7.5 billion non-cash impairment charge, a $780 million charge to assets and a $160 million restructuring charge are to blame. Revenues totaled $22.2 billion, while gross margin came in at $14.7 billion. Had it not been for the write-downs related to Microsoft's phone business, non-GAAP numbers show that the company would have posted a $6.4 billion profit.
The company's numbers were down all around compared to the year-ago quarter, with total revenues declining around 5%, gross margin down 7%, and profit down, well, $8.5 billion. Notably, Windows OEM revenue was down 22% from the year-ago quarter, which Microsoft says is a result of the general PC market decline and the end of Windows XP's end-of-life refresh cycle.
Not all is bad news for Redmond. Other divisions posted significant gains. The Surface family's revenue was up 117% year-over-year to $888 million, thanks largely to demand for the Surface Pro 3 and the introduction of the Surface 3. Xbox and Bing revenues were up more than 20% each, and Office 365 now counts 15.2 million subscribers, adding just shy of 3 million more in Q2.
Q2 is the end of Microsoft's fiscal year, and for the 12-month period ending June 30, the company reported $93.6 billion in revenue, $60.5 billion in gross margin, and $18.2 billion in profit, with a total of $10 billion in charges for impairment, integration, and restructuring. Revenues were up 7% overall, and gross margin was up slightly, but profits fell steeply from $27.8 billion the previous year.