Microsoft Expects to Achieve Break-Even at Nokia Unit in Two Years

Technology giant Microsoft said it aims to end losses at its recently acquired Nokia handset unit within two years, after reporting a 7% decline in quarterly profit, primarily attributed to the Nokia integration.

In a call with analysts, Microsoft's chief financial officer, Amy Hood, said the company expects to cut operating expenses significantly at the handset division and get the unit to break-even within two years.

"We are aggressively working to drive synergies across key functions such as development, supply chain and operations as we integrate and right-size the business," Hood said of the phone division.

"We [are] set to realize more than $1bn [£586m, €741m] in synergies and as a result we will be on a path to reach operating break-even for the phone business in fiscal year 2016. Including phone, we expect operating expense to be between $34.2bn and $34.6bn in fiscal year 2015.

"We've made the difficult choices to get the cost base to a place where we can deliver... and we do assume that we continue to grow our units through the year and into 2016 in order to get to break-even."

Earlier, the world's largest software company reported a 7% decline in quarterly profit, primarily due to costs associated with the integration of the Finnish mobile phone maker.

Nokia's handset division contributed $2bn to Microsoft's quarterly revenue, but the unit posted an operating loss of $692m.

Microsoft paid $7.2bn to buy the Nokia handset division in April, as part of its plan to take on smartphone giants Apple and Samsung.

Recently, Microsoft announced a massive restructuring at the company, involving several thousands of job cuts primarily from the Nokia division.

Microsoft has cut down about half of Nokia's 25,000 employees and shut down some of its facilities to reduce costs.

The company said it would focus more on the fast growing cloud computing business.

"We will be relentless in our focus on our core, agile work and life experiences and the two platforms that support it, the cloud operating system and the device operating system and hardware," CEO Satya Nadella said during the call.

Microsoft shares rose 1% in after-hours trade, as investors welcomed the company's restructuring.