An updated guide to deciphering Microsoft's financials
Microsoft's fourth quarter 2014 earnings will be the first to factor in impact from the Nokia devices and services business Microsoft acquired in April. Here's how the company's reporting structure will change as a result.
The five reporting segments outlined at that time included three in Devices and Consumer (D&C) -- D&C hardware, D&C licensing and D&C other -- and two in Commercial -- Commercial licensing and commercial other.
After this change, the D&C Hardware reporting segement will includes: D&C licensing; Computing and Gaming hardware; Phone hardware; D&C other Hardware. Prior to today, the D&C hardware segment included Surface; Xbox and Xbox Live subscriptions and "other" hardware.
"Under the existing commercial agreement between Microsoft and Nokia, license sales and platform payments are reported in the D&C Licensing segment. Once the acquisition closes, results for Nokia Devices and Services will be reported in the D&C Hardware segment. For Q4, we will clearly show the impact of the ending of the commercial agreement, Nokia’s ongoing operations and any one-time integration and severance costs. And we remain committed to achieving annual cost synergy targets of at least $600 million within 18 months of close."