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Microsoft just shuffled its financial reporting organizations

Key Speakers At The Microsoft Build Developer 2015 ConferenceKey Speakers At The Microsoft Build Developer 2015 Conference
Microsoft CEO Satya Nadella.Photograph by David Paul Morris — Bloomberg/Getty Images

On Monday, Microsoft changed up its financial reporting structure, consolidating what had been five buckets into three bigger buckets in a way that mirrors changes that chief executive Satya Nadella outlined in last summer.

The new Productivity and Business Processes segment will roll up both Office and Office 365 for commercial customers and consumers, as well as the company’s Dynamics financial applications and Dynamics CRM Online.

“Intelligent Cloud” includes public, private, and hybrid server products as well as Windows Server, SQL Server, System Center, Azure, and Enterprise Services.

And the “More Personal Computing” segment will include licensing revenue from Windows, Surface devices, phones, Xbox consoles, and Bing search.

The new personal computing segment appears to be the old Windows Online Services Division combined with the Entertainment and Devices division, “with Surface and Nokia being incremental additions,” Nomura Securities analyst Frederick Grieb said in a research note. Microsoft (MSFT) last re-did its operating segments in 2013 when then-chief executive Steve Ballmer cut reporting silos based on Office, Windows, server products, and online services.

The segments that this reorg erased were Devices and Consumer Hardware, Licensing and Other; and Commercial Licensing and Other.

In an internal memo sent in late June, Nadella told employees the company had to focus on “three interconnected and bold ambitions:”

  • Reinventing productivity and business processes
  • Building the intelligent cloud platform
  • Creating more personal computing

It looks like the reorg hews pretty closely to those principals. Microsoft, which will announce first quarter 2016 results on October 22, will host a conference call for analysts at 9 a.m. PST on Tuesday to explain the changes in more detail.

For details on Microsoft and its Windows 10 plans check out the video.

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