Microsoft CEO Satya Nadella

The cost of Microsoft Corp.’s massive summer layoffs and a shift in focus to the mobile market has meant a dip in profits for the tech giant. Yesterday the company released its fiscal first quarter earnings, reporting a 13 percent slide in profits from 62 cents a share this time last year to 54 cents a share. But as Satya Nadella completes his second full quarter as Microsoft CEO, sales are up 25 percent from this time last year to $23.2 billion.

As the company pushes on with its transitions following the $7.17 billion acquisition of Nokia Oyj’s mobile phone division in April, hefty operating costs have been incurred, while company layoffs set Microsoft back a reported $1.14 billion in severance packages shared among 14 percent of 125,000 global employees. It’s not all bad news though; Lumia phone sales rose from 8.3 million handsets sold to 9.3 million over the year, resulting in $2.6 billion in sales revenue for Microsoft’s smartphone division.

Another positive is an 127 percent increase in sales of Microsoft’s Surface tablets, including the much improved laptop hybrid Surface Pro 3 released in June, bringing total revenue up to $908 million. It’s in the cloud division were Microsoft has seen its real silver lining to smartphone woes. Commercial cloud products sales, including sales from the Azure cloud platform and Office 365, were up 128 percent in the first quarter.

In spite of the dip in profits it seems investors have taken note of the positives and believe in Microsoft’s new vision, evident in a 4.3 percent rise in Microsoft stock during after-hours trading.

In a press release Nadella commented on the results and his plans in the pipeline, saying, “We are innovating faster, engaging more deeply across the industry, and putting our customers at the center of everything we do, all of which positions Microsoft for future growth.”