New Financial Reporting Mirrors Reorganization

In a filing with the U.S. Securities and Exchange Commission (SEC) and in two briefings for financial analysts in Sept. 2013, Microsoft described major changes to its financial reporting. The changes, which reflect the reorganized “One Microsoft” devices and services strategy, are designed to provide insight into the new business model, show progress against the new strategy, and align financial reporting with how Microsoft manages it business. However, the changes mean comparisons with previous financial reports will require some analysis, and customers may find it more difficult to determine the financial health of specific product groups and products.

New Organization, New Reporting

Historically, Microsoft has reported revenue and operating profit by product group. Over time, the number of product groups and the mix of products have changed, but investors and customers could determine the health of a product or product group by looking at the financial reports. The old reporting structure was based on five product groups (Windows, Business, Server and Tools, Home and Entertainment, and Online Services) while the new reporting is based on two major groups and several segments, as follows: