Microsoft Changes Financial Reporting Segments

Juggling of products and services segments is designed to emphasize the company's mobile and cloud businesses.
Katie Kuehner-HebertSeptember 29, 2015

Microsoft on Monday said that it would begin reporting revenue and operating income based on three operating segments, “productivity and business processes,” “intelligent cloud,” and “more personal computing,” to emphasize its mobile and cloud businesses.

The productivity and business processes segment would include results from Office and Office 365 for commercial and consumer customers, as well as Dynamics and Dynamics CRM Online. The intelligent cloud segment would include results from public, private, and hybrid server products and services such as Windows Server, SQL Server, System Center, Azure, and Enterprise Services. The more personal computing segment would include results from licensing of the Windows operating system, devices such as Surface and phones, gaming, including Xbox consoles, and the search business.

The Redmond, Wash.-based company said it would announce its financial results for its first fiscal 2016 quarter on Oct. 22, under the new structure. To aid investors with the transition, revenue and gross margin would also be provided for the operating segments that Microsoft reported during fiscal year 2015 – but this information will only be provided within the first quarter results, and not thereafter.

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Microsoft in July reported a loss of $3.2 billion for its fiscal fourth quarter, “a departure for a company that typically generates reliable profit,” the Wall Street Journal said. The loss resulted from $8.4 billion in previously announced charges as well as layoffs in the company’s struggling mobile-phone operation, which Microsoft acquired from Nokia.