I have this spreadsheet that I created that thought I’d share. Basically, it’s a simple table of all of Microsoft’s earnings across every business division we have from year to year. I’ve entered all of the revenue & income numbers (a.k.a. the “money coming in” vs. overall profit of each division) and graphed it out in Excel 2007.
(Note: You’ll need to have Office Excel 2007 installed, have the Excel 2007 Viewer installed, or if you already have Office 2003/XP/2000 installed, you’ll need to download and install the Office 2007 Compatibility Pack to allow you to read and write the OpenXML file format for Excel 2007 (.XLSX) – which is much better than the older .XLS format for compression, reliability, and programmability.)
DEFINING THE DIVISIONS
For the uninitiated, there are 5 divisions within Microsoft and our financials are reported along these organizations:
- Client (Windows desktop & Embedded revenue)
- Server & Tools (Server products that aren’t aligned with Information Worker initiatives along with Developer Tools)
- Business (Information Worker technologies like Office, Office Servers along with Business Solutions like CRM & the Dynamics family of products)
- Online Services (Windows Live, Office Live, MSN Services, Advertising Services, etc.)
- Entertainment & Devices (Xbox, Xbox Live, Zune, & Windows Mobile)
ALSO QUARTER-TO-QUARTER NUMBERS
For the truly anal, I’ve also got all the numbers from quarter to quarter, and broken out each quarter’s earnings year over year so you can compare, for example, what the “Holiday season” was like for Microsoft’s Entertainment & Devices division (a.k.a. the Xbox guys) year over year.
Now before the more short-sighted folks scream that the sky is falling, be aware that revenue & income are not always linear: Certain things happen – whether you hear about them or not in the press – that create irregularities in earnings & profitability in certain quarters.
For example:
- In Q4 2007, there was a sudden & massive drop in income (profitability) in the Entertainment & Devices division. For the informed, this was because of the $1B charge that was taken in that quarter to fund the extended 3 year warranty applied to Xbox 360’s that were having “red ring of light” failures and it was deemed necessary to take the hit for the sake of our customers.
- In Q2 2007, there was a strange drop in revenue/income in the Client division relative to Q2 earning in previous years and a sudden irregular surge in revenue/income in the same division in Q3 of the same year. This was because we deferred revenue from Windows OEM licensed PCs from that Q2 into Q3 causing a delay in when that revenue was realized in the ol’ accounting books.
- Prior to Q2 2004, Microsoft didn’t report per division income so although I have revenue numbers for Q1 2004, I don’t have income numbers. (That’s why data points for that quarter are missing) This incidentally is also the reason I started this chart at 2004. Operating income (i.e. revenue less operating costs, or “profit”) is a pretty important dimension, don’t you think?
THE PRE-2007 FUDGE FACTOR
Incidentally, I had to munge some numbers in the first few years. What I mean by that is that before 2007, in case you weren’t constantly looking at our financials back then, Microsoft used to report its revenue & income across 7 divisions instead of 5:
- Client
- Information Worker
- Server & Tools
- Business Solutions
- MSN
- Mobile & Embedded Devices
- Home & Entertainment
It’s not an exact correlation as I understand it but what I did was I merged the Office & Business Solutions numbers to create synthetic “Business Division” numbers and I merged the Home & Entertainment & Mobile devices numbers to create synthetic “Entertainment & Devices” numbers. The end result still totals the complete revenue across all divisions but if my “inaccuracy” bothers you, simply ignore the pre-2007 numbers.
Anyway, here’s my spreadsheet. Hope you find it interesting.
kurtsh
Kurt Shintaku's Blog 