Business PCs, Data Centers Drive Financial Results

Business PC replacement and large-scale data centers are likely to play a major role in Microsoft’s 2012 fiscal year, which began July 1, while the company’s consumer businesses hold their courses. The company has released results for the prior fiscal year and offered guidance for the year ahead. Understanding the results and guidance can help investors plan, but they can also help Microsoft’s customers and partners predict where the company will focus its resources.

Operating Results in Five Divisions

Microsoft reports operating results and provides guidance in five divisions. (See the chart “Five Divisions Revenue and Income“.) These divisions do not all correspond directly to Microsoft business units. (See the illustration “Divisions Versus Organizations“.)

The divisions provide a framework for understanding how Microsoft’s products and services translate into revenue and income, which in turn can help identify where the company is placing its bets. The division structure also has held with minor adjustments over several years, and thus provides a consistent way to understand the company’s strategy as it evolves.