Why is Microsoft changing its reporting segments?

Microsoft is changing its reporting segments to better align with its strategic focus on a 'mobile-first, cloud-first' world and to provide investors with a clearer view of performance across its key business areas. The new structure aims to reflect how the company's chief operating decision maker reviews performance and allocates resources.

What are the new reporting segments?

The three new reportable segments are: Productivity and Business Processes (including Office and Dynamics), Intelligent Cloud (including server products like Azure and Enterprise Services), and More Personal Computing (including Windows, Devices, Gaming, and Search advertising). A 'Corporate and Other' category will also be maintained for activities not attributed to specific segments.

Will this change affect Microsoft's reported net income or earnings per share for past periods?

No, the recasting of segment financial results is for reporting and analytical purposes. It does not represent a restatement of previously issued financial statements and will not affect Microsoft's reported net income, earnings per share, total assets, or stockholders' equity for any previously reported periods.

When will investors see financial results under the new segment structure?

The new reporting structure will be reflected beginning with the quarter ending September 30, 2015. Prior periods will be adjusted retrospectively in financial statements to ensure consistency and comparability.

MSFT 8-K: Regulation FD

Summary

Microsoft Corporation (MSFT) filed an 8-K on September 29, 2015, to disclose a significant change in its financial reporting structure, effective for the first quarter of fiscal year 2016. The company is reorganizing its reportable segments into three primary divisions: 'Productivity and Business Processes,' 'Intelligent Cloud,' and 'More Personal Computing.' This shift aligns with Microsoft's strategic focus on a 'mobile-first, cloud-first' world and aims to provide a clearer view of performance across key business areas. The company also provided recast historical financial data for fiscal years 2014 and 2015 based on these new segments, allowing investors to analyze trends under the updated structure.

Key Highlights

1Microsoft is restructuring its financial reporting into three new segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing, effective FY2016.
2The 'Productivity and Business Processes' segment includes Office Commercial, Office Consumer, and Microsoft Dynamics.
3The 'Intelligent Cloud' segment comprises server products (including Azure) and Enterprise Services.
4The 'More Personal Computing' segment encompasses Windows, Devices (phones, Surface), Gaming (Xbox), and Search advertising.
5The company provided recast revenue and operating income data for FY2014 and FY2015 reflecting the new segment structure.
6The change in reporting structure is intended to better reflect the company's strategic focus on a mobile-first, cloud-first strategy.
7Prior periods will be adjusted accordingly in future financial statements to maintain comparability.

MICROSOFT CORP 8-K Report, Regulation FD Disclosure (Sep 29, 2015)

Summary

Key Highlights

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