Microsoft’s earnings would have looked awful under the old reporting scheme

Microsoft rolled out a new way to report earnings with its first quarter, 2016 earnings on Thursday.

This new reporting structure consolidated Microsoft’s businesses into three new units.

The previous structure had two major units (commercial and consumer) and broke out a few different businesses in each of those.

As you can see, under the old scheme, all business units shrunk except two:

Msft old reporting segments graphic

The two that did well under the old structure:

  • Commercial Other, which was basically the cloud business (including Enterprise Services/consulting, Office 365, Azure, and Dynamics CRM Online)
  • and Devices & Consumer Other (Bing, MSN, Office 365 Home Premium, video games, the app store).

Under the new structure, Microsoft’s Productivity and Business Processes declined 3% but was up 4% in constant currency to $US6.3 billion. It includes Office, Office 365 services, and related products.

The new “Intelligent Cloud” unit was up 8% (up 14% in constant currency) to $US5.9 billion. It includes all its data center enterprise software like Windows Server, and cloud-based services like Azure.

The “Personal Computing” unit declined 17% (down 13% in constant currency) to $US9.4 billion. It includes Windows, Xbox, mobile devices like phones and the Surface tablet, and online services like search.

Either way Microsoft reports earnings, the cloud is the growth engine — particularly Office 365.