Microsoft reshuffles revenue segments

2 min read

Time to measure the finances of Microsoft (Nasdaq: MSFT) in a new way.

The world's largest independent software vendor announced Wednesday it would change the way it reports financial results. Microsoft now will divide its revenue among five segments:

  • Desktop Software:
  • includes Office and non-server Windows products.

  • Consumer Software, Services and Devices:
  • includes the MSN portal, WebTV, educational software, games, Windows CE and other software for embedded devices, and applications for mobile and wireless.

  • Enterprise Software:
  • includes Windows 2000 Server, SQL Server databases, Exchange Server, developer tools, product support and consulting

  • Consumer Commerce:
  • contains online operations in which Microsoft has majority ownership, including Expedia travel services, HomeAdvisor real estate and CarPoint auto buying.

  • Other:
  • Keyboards and mouse products, and Microsoft Press.

Shares of Microsoft traded at 60.75 in afterhours activity on the Island electronic communications network, following the announcement. Microsoft stock closed Wednesday's regular trading at 60.625, down 2.0625 for the session.

First quarter results, scheduled for Oct. 18 release, will be reported under those divisions, the company said. Microsoft's reclassified results for the last two yeras indicate desktop software generated 73.5 percent of the company's revenue in fiscal 1999 and 71 percent in fiscal 2000.

Microsoft's new division fits the company's plan to focus on Internet-based offerings through Microsoft.NET. But the reclassification wasn't strictly motivated by the .NET initiative, Connors said during an afternoon conference call.

"This categorization or segmentation will serve us well for some time to come, and should help you to see how we're doing in various segments that might not have been as clear in the past," Connors said.

The company had previously measured its business as four units: Windows Platforms, Productivity Applications and Developer, and Consumer and Other.>