What to watch for at Microsoft's September 19 analyst meeting

Microsoft is resurrecting its Financial Analyst Meeting this year to share more on its planned reporting structure and other details about its reorg. What should and will officials discuss?
Written by Mary Jo Foley, Senior Contributing Editor

Microsoft officials said during the last earnings call that the company was planning to resurrect its Financial Analyst Meeting (FAM) this year to provide more details on its reorg and reporting structure.


Microsoft officials announced a cross-company reorg on July 11. So far, there's been no word as to how Microsoft plans to report its results, now that the five business units have been replaced by four engineering organizations, plus a central marketing team.

The date of this year's FAM is September 19. (And so far, at least, it looks like press are not going to be allowed to attend, unlike previous FAMs. I'm hoping we'll get to watch a Webcast, at least.)

Brent Thill, an analyst at UBS, in a note to clients, acknowledged that Microsoft is in the midst of its transition to a devices and services company. But earnings-per-share "volatility has increased due to a shift to "lower-margin hardware and sub-scale cloud services in the near term."

As a result, Thill said, "we think MSFT needs a convincing argument and give specifics around the economic profit shareholders can expect from this transition, (as) ambiguity risks investors may walk away and the stock stalls out."

Here are Thill's five "hot topics" that he and his team want to see addressed at FAM:

1. greater clarity on margins
2. metrics that show cloud services traction
3. details on its strategy for competing in hardware (given the $900 million Surface RT write-down and low revenues for year one of the Pro/RT)
4. evidence that Microsoft has creative plans for its cash stock pile, which is approaching $100 billion
5. information on what the company is thinking on the succession planning front (who runs Microsoft after CEO Ballmer)

Michael Turits, an analyst with Raymond James, had his own wish list for topics for the 19th. He said he is hoping to hear discussion around

1. long term financial impact on margins, revenue and capex of the transition to cloud, Azure, Office 365
2. real numbers around Azure, Office 365, and the business plan for each
3. next steps on the consumer side, given inability of Windows 8 to stem declines in PCs and make headway in tablets and phone
4. more details on company reorg impact on financials
5. changes in capital structure given more capital investment and desire of investors for more buybacks and stronger dividend

I'm kind of doubtful we'll hear much, if any, of these details at FAM -- and at least not in any kind of real detail. 

Officials said during Microsoft's July 18 earnings call that they will be discussing "our strategy, our new organizational structure, and any changes to our reporting segments, as well as more on Microsoft's year-ahead outlook during FAM this year. 

What else do you think Microsoft execs should, could and actually will discuss on September 19?

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