Microsoft strategizes on operating segment-wise results

As part of its new strategy, Microsoft Corporation will announce quarterly results under the three new headers based on operating a segment-wise business. The global software major has devised a rearranging system for financial results by restructuring business into three operating segments.

The three new operating segments are the Productivity and Business Process, the Intelligent Cloud, and More Personal Computing. The very objective of the Redmond-based software major is to emphasize on mobile and cloud businesses.

These three new headers-based quarter results will be effective from next quarter results scheduled to be announced on 22 October.

According to Satya Nadella, Chief Executive, Microsoft Corporation, the three new operating segments have been classified considering the interconnected and bold ambitions aimed at the company's overall growth. The three new operating segments will indicate the core operations of Microsoft.

The Productivity and Business Process segment involves the performance of Office and Office 365 for commercial and consumer customers. This also includes Dynamics and Dynamics CRM online.

The Intelligent Cloud segment related to the public, private and hybrid server products and services including Windows Server, SQL Server, System Center, Azure and Enterprise Services. The More Personal Computing segment covers licensing of the Windows operating system, devices like surface and phones, gaming including Xbox consoles and search.

Microsoft Corporation's new plan of segment-wise results will classify financial results from its commercial cloud business. This segment is very critical for the company as Microsoft and other IT majors are focusing on it in the wake of weakening demand for personal computers (PCs).

Earlier, Microsoft's cloud business was part of the commercial segment including Office and Windows business software. Its former devices and consumer segment included Office consumer subscribers, surface tablets and Xbox game consoles and other related software.

Microsoft Corporation recorded $22.2 billion revenues for the quarter ending 30 June 2015 and gross margins of $14.7 billion. The software major suffered from operating loss and loss per share of $2.1 billion and $0.40 per share respectively during the quarter.

The acquisition of Nokia's mobile business had impacted the performance of Microsoft. The $7.5 billion non-cash impairment charge related to assets part of the acquisition of Nokia Devices and Services (NDS) business and another charge of $160mn pertaining to restructuring plan together put a lot of pressure on Microsoft's financial performance.

However, Microsoft paid $6.7 billion to shareholders in forms of dividends and share repurchases.

Microsoft Corporation has been changing with the times over the decades. All eyes are turned to Microsoft as the new focus whether the corresponding new structure how far it will bring the long-term benefits to the organization.