

Microsoft Altered Windows Sales: Moved $259 million from other units - raganwald
http://www.informationweek.com/news/software/operatingsystems/showArticle.jhtml?articleID=228200850

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kenjackson
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.

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rbanffy
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.

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kenjackson
_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.

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rbanffy
> 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.

