Microsoft's Russian branch on the brink of bankruptcy filing, according to reports
Microsoft's subsidiary in Russia, Microsoft Rus LLC, is teetering on the edge of filing for bankruptcy, according to reports by Reuters. The Russian Fedresurs registry corroborates this information, indicating that the subsidiary may soon officially declare insolvency.
The financial performance of Microsoft Rus LLC in 2024 reveals a net profit of 174.1 million rubles ($2.2 million), marking a significant increase of 38.9% from the previous year. Despite this growth, the subsidiary is reportedly leaving behind a substantial debt of approximately $949,000.
Microsoft's strategic exit from Russia, due to operational risks and geopolitical challenges, appears to be the driving force behind this move. The subsidiary has other entities operating in Russia, including Microsoft Development Center Rus, Microsoft Mobile Rus, and Microsoft Payments Rus. However, specific financial details for these subsidiaries are currently unavailable.
The exit from Russia is part of a broader strategic reassessment aimed at mitigating risks and reallocating capital to sectors with higher-margin opportunities, such as AI, cloud services, and cybersecurity. Closing branches and divisions in 13 Russian cities in late 2024 and early 2025 reflected unsustainable liabilities and operational challenges. Furthermore, the exit is also aimed at minimizing reputational damage associated with operating in a sanctioned economy.
Sources:[1] Microsoft's Financial Report for 2024[2] Microsoft's Statement on Exit from Russia[3] Reuters Report on Microsoft Rus LLC[4] Fedresurs Registry Entry for Microsoft Rus LLC[5] Financial Report for Microsoft Rus LLC
The financial surge of Microsoft Rus LLC in 2024, despite the substantial debt, might not have been the determinant in its potential insolvency, given Microsoft's strategic withdrawal from Russia due to operational risks and geopolitical challenges. This exit, however, seems to be an intentional move to invest in sectors with higher profit margins, such as AI, cloud services, and cybersecurity.
