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Microsoft Altered Windows Sales: Moved $259 million from other units

22 points by raganwald 16y ago

kenjackson 16y ago
This is an odd story, because it just as easily be reframed: "MS Downplaying Consumer Division Sales?" One big thing that came out of the E&D shakeup was Media Center moved to Windows accounting, rather than E&D. I don't think Surface numbers had much to do with it. Personally I would have kept the money in E&D. No one cares about Windows YoY growth, except that it doesn't fall off of a cliff. But everyone is watching the E&D growth/loss.
- rbanffy 16y ago
  Windows is seen as critical to Microsoft's future and, apparently, Windows division has a lot of political power with the accounting folks. Any news that could put Windows sales in doubt could be seem as the always announced beginning of Microsoft's inevitable downfall. I have no love for Microsoft, but I too get tired of people saying that Microsoft is dying. Of course it is. We too will die, hopefully a good many decades from now. Besides that, what good would it do for Microsoft to downplay the entertainment division's revenue? It wouldn't make sense to title the article that way when Microsoft is most probably trying to make its numbers look a little better.
  - kenjackson 16y ago
    Any news that could put Windows sales in doubt could be seem as the always announced beginning of Microsoft's inevitable downfall. But $259M doesn't really change the discussion about Windows. Windows did $4.8B in the quarter, up from $2.9B a year ago. Making it $4.5B doesn't make anyone pause. But would take E&D from $1.8B to $2.1B and show 50% YoY growth. That's impressive, and something that might begin to move the stock. The fact of the matter is that everyone knows that Windows is not a growth area for MS. And if anything, they'd want to wait until a bad quarter to begin to shift earnings to Windows, not in a record-breaking quarter. Now they have less accounting games at their disposal in the inevitable future when Windows does begin to make less money. In summary, what I'm saying is that this accounting has nothing to do with trying to make Windows look good (or E&D look bad). I think it is just internal restructuring of P&Ls that had a coincidental a minor effect on fiscal reporting.
    - rbanffy 16y ago
      > had a coincidental a minor effect on fiscal reporting. It probably had a much more relevant impact on executive compensation ;-) When someone goes out of his way to do something that makes no sense, it's probably because we don't understand why it was done and, after all, it actually makes lots of sense. As it is now, it's weird. But the problem is probably in our perception of its weirdness, not in the number manipulation itself.

22 points by raganwald 16y ago

This is an odd story, because it just as easily be reframed: "MS Downplaying Consumer Division Sales?" One big thing that came out of the E&D shakeup was Media Center moved to Windows accounting, rather than E&D. I don't think Surface numbers had much to do with it. Personally I would have kept the money in E&D. No one cares about Windows YoY growth, except that it doesn't fall off of a cliff. But everyone is watching the E&D growth/loss.

rbanffy 16y ago
Windows is seen as critical to Microsoft's future and, apparently, Windows division has a lot of political power with the accounting folks. Any news that could put Windows sales in doubt could be seem as the always announced beginning of Microsoft's inevitable downfall. I have no love for Microsoft, but I too get tired of people saying that Microsoft is dying. Of course it is. We too will die, hopefully a good many decades from now. Besides that, what good would it do for Microsoft to downplay the entertainment division's revenue? It wouldn't make sense to title the article that way when Microsoft is most probably trying to make its numbers look a little better.
- kenjackson 16y ago
  Any news that could put Windows sales in doubt could be seem as the always announced beginning of Microsoft's inevitable downfall. But $259M doesn't really change the discussion about Windows. Windows did $4.8B in the quarter, up from $2.9B a year ago. Making it $4.5B doesn't make anyone pause. But would take E&D from $1.8B to $2.1B and show 50% YoY growth. That's impressive, and something that might begin to move the stock. The fact of the matter is that everyone knows that Windows is not a growth area for MS. And if anything, they'd want to wait until a bad quarter to begin to shift earnings to Windows, not in a record-breaking quarter. Now they have less accounting games at their disposal in the inevitable future when Windows does begin to make less money. In summary, what I'm saying is that this accounting has nothing to do with trying to make Windows look good (or E&D look bad). I think it is just internal restructuring of P&Ls that had a coincidental a minor effect on fiscal reporting.
  - rbanffy 16y ago
    > had a coincidental a minor effect on fiscal reporting. It probably had a much more relevant impact on executive compensation ;-) When someone goes out of his way to do something that makes no sense, it's probably because we don't understand why it was done and, after all, it actually makes lots of sense. As it is now, it's weird. But the problem is probably in our perception of its weirdness, not in the number manipulation itself.