By Tess Stynes 

Microsoft Corp. said its revenue fell 5.1% in its latest quarter, hurt by continued weak PC demand, and posted its biggest quarterly loss ever on a hefty write-down and other items related to the Nokia mobile-phone business acquired last year.

Shares fell 3.3% to $45.65 in recent after-hours trading.

For the period ended June 30, revenue decreased to $22.18 billion from $23.38 billion a year earlier. Excluding currency impacts, revenue dropped 2%. Analysts polled by Thomson Reuters expected revenue of $22.03 billion.

Per-share earnings, after stripping out the write-down and other one-time items, also beat expectations.

Microsoft's Windows smartphones have a tiny share of the smartphone market, which is dominated by market leader Apple Inc.'s iPhone.

Earlier this month Redmond, Wash.-based Microsoft said its was writing down about 80% of the $9.4 billion deal for Nokia's handset business and that it would cut more than 6% of its global workforce--mostly in its mobile-phone operation--a year after an earlier round of job cuts to the business.

Overall, Microsoft reported a loss of $3.2 billion, or 40 cents a share, compared with a year-earlier profit of $4.61 billion, or 55 cents a share. Excluding the write-down, restructuring charges and other items, per-share earnings rose to 62 cents from 56 cents. Analysts expected per-share profit of 56 cents.

Sales of Office products to businesses fell 4% as negative currency impacts masked underlying growth of 1% amid the transition to Office 365 and lower transaction revenue linked to declining business PC demand. Windows volume licensing revenue declined 8%, or 4% excluding the impact of foreign-exchange rates.

In its consumer and device business, Windows OEM revenue decreased 22%, also linked to PC market declines.

The sales declines were partly offset by growth in Microsoft's commercial cloud business and sales of computing and gaming hardware, including Xbox which increased 27%, and Surface, which more than doubled.

Cloud software sold to businesses--primarily Office 365, the Microsoft Dynamics CRM sales tool and the Azure cloud-computing service--surged 88%, and excluding the impact of foreign-exchange rates it soared 96%.

Investors likely will be interested in what Chief Executive Satya Nadella's has to say on the conference call about the strategy for turning Microsoft's mobile business around.

The latest version of Microsoft's operating system--Windows 10--is due to come out next week. However, analysts ahead of the earnings report weren't expecting the updated software will do much to boost weak sales trends for personal computers. Wall Street also will be watching for any details on how the new Windows software will affect Microsoft's financial performance.

Write to Tess Stynes at tess.stynes@wsj.com

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