Apps, The Cloud, and Windows/Devices.
Microsoft uses fancier terms, but that’s the simple way of looking at the company’s new financial reporting segments, which make their debut on Thursday along with the company’s earnings report for its first fiscal quarter.
With the change, Microsoft is shifting to just three operating divisions for purposes of financial reporting. That’s down from six previously. By lumping together a wide variety of products and businesses into fewer divisions, the change could make it tougher for investors to gauge the performance of individual pieces of the company, depending on how much extra detail Microsoft provides.
Microsoft says the new divisions more accurately reflect how CEO Satya Nadella looks at the company.
As part of the changes, which were announced in September, the company released historical financial results for the past two years, showing what the results would have looked like if the new reporting structure had been in place.
Here’s a GeekWire chart showing those revised results, along with an explanation of the new divisions.
Productivity and Business Processes: Office Commercial (Office 365 Commercial, Microsoft Office, Exchange, SharePoint, and Skype for Business, and related Client Access Licenses.) Office consumer, Outlook.com, OneDrive, consumer Skype, Microsoft Dynamics business solutions.
Intelligent Cloud: Windows Server, Microsoft SQL Server, Visual Studio, System Center, and related CALs, Microsoft Azure. Enterprise Services, including Premier Support Services and Microsoft Consulting Services.
More Personal Computing: Windows (Windows OEM licensing, Windows volume licensing, patent licensing, Windows Embedded, MSN display advertising, and Windows Phone licensing. Devices, including phones, Surface, and Microsoft PC accessories. Gaming, including Xbox hardware; Xbox Live (transactions, subscriptions, and advertising); first-party video games; and second- and third-party video game royalties. Search ads.
For comparison, here’s what Microsoft’s divisional revenue looked like under the previous reporting segments.
Even as the company shifts to the new reporting structure this week, Microsoft will continue to provide an alternative view of the results under the old format, to help with the transition, but only this time, not for future quarters.
Analysts polled by Thomson Reuters are expecting the company to post $20.98 billion in quarterly revenue, down 10 percent, and earnings of 58 cents per share, an increase of 8 percent. Check back for coverage on Thursday afternoon — which will be a big day for earnings, with Google and Amazon also scheduled to report.
