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Microsoft's Windows division has been on something of a roll recently,
but a deeper look into the company's financials seems to indicate that
the reported numbers might look better than reality. Information Week
has done some deep digging into Microsoft's recent SEC filings and
found that several bookkeeping changes resulted in significantly
increased reportings of revenues in the company's Windows division.
Revenues that had been assigned in previous quarters to other
divisions within the company -- mostly the Entertainment and Devices
unit which includes highly successful businesses such as Xbox -- were,
in this past quarter, re-assigned to the Windows operating system
division.
So just how much money was moved? Well, according to Information Week
and the relevant SEC filings statements, about $259 million, or a
boost of 6.5% in revenue to the division overall for a total of $4.24
billion rather than the $3.98 billion originally stated for Q1 2010.
This also resulted in a 25% reduction in revenue for EDD, while the
total -- $12.92 billion -- stayed exactly the same. Of course, all
these bookkeeping maneuvers mean that Redmond's Windows division
looked like it was making a decent amount more cash than it actually
was, and when taking into account another complex move -- that of
deferring $1.5 billion in upgrade revenues from Windows Vista machines
sold in Q4 2009 to Windows 7 in Q1 2010 -- the resulting picture is a
bit different than it would appear on the surface. Ultimately, it
looks like Microsoft raked in an 11% increase in Windows revenue
rather than the 66% reported, when removing both the bookkeeping
changes from other units and the upgrade deferrals. Of course, this is
all apparently technically on the up-and-up, in terms of financial
reporting is concerned, but it does give some insight into the
stunning profits recorded in the Windows division as of late.
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