Share story

When Microsoft reports its fourth quarter and fiscal year results Thursday, perhaps the most interesting aspect will be what isn’t announced.

Analysts expect Microsoft to report better quarterly results this year than last, when the company posted its first quarterly loss.

That loss was attributable to some unusual factors, including a $6.2 billion write-down from the 2007 acquisition of online ad company aQuantive, and deferred revenue from a Windows 8 upgrade offer.

Adjusting for those items, Microsoft had fourth-quarter revenue and earnings per share last year of $18.60 billion and 73 cents, respectively.

This quarter, analysts expect revenue and earnings per share of $20.74 billion and 75 cents.

But, “What I expect is probably almost immaterial,” said Norman Young, an analyst with investment research firm Morningstar. “What I mean is: The results will probably look good because last year was weaker.”

More telling for the future of the company, analysts say, are other questions, including:

• Microsoft CEO Steve Ballmer announced a massive reorganization of the company last week. Will that restructuring be reflected in the financial reporting, and will that make it easier or harder to see how specific products or services are doing?

• How are the company’s tablets and smartphones selling?

• What do company leaders think of ValueAct Holdings, the activist shareholder that is expected to seek board representation sometime this year after buying nearly $2 billion in Microsoft stock — a bit less than a 1 percent stake in the company.

Also of note, this will be new Chief Financial Officer Amy Hood’s first time leading the conference call with analysts that traditionally follows the release of financial results.

Hood succeeded former CFO Peter Klein, whose last day on the job was June 30.

In a conference call with reporters after last week’s reorganization was announced, Hood said the company would be reporting today’s fourth quarter earnings results using the existing reporting structure.

But, “Obviously, the requirement over a period of time is to report your system in the way that the CEO manages it,” she said. “We’ll obviously investigate any needed changes over time.”

The existing reporting structure divides the company into five large groupings (which are different from the company’s product divisions).

Those five are: Windows (Windows, Internet Explorer, Surface); Business (Office, SharePoint, Lync, Dynamics, Yammer); Server & Tools (Windows Server, SQL Server, System Center, Azure); Entertainment & Devices (Xbox, Kinect, Windows Phone, Skype); and Online Services (Bing, MSN).

Under this system, some numbers are already obscured. For instance, Microsoft doesn’t separate Windows Phone or Surface numbers from the overall performance of their respective divisions.

But it also has been relatively easy to see how other services, such as Bing, was doing.

Under the new corporate structure, Ballmer has organized the company’s products by function and lumped together some previously disparate products.

As a result, depending on how the company chooses to report its finances in the future, it could make it harder to tell how individual products are doing.

For instance, cash cow Office is now in the same Applications and Services division as money-losing Bing.

Windows Phone, which still holds only a tiny portion of the world’s smartphone market share, is now in the same Operating Systems division as market-dominating Windows and Xbox.

Veteran Microsoft analyst Rick Sherlund of investment bank Nomura wrote in a note to investors that he expects the reorganization to change the financial reporting structure and is expecting the company to meet with analysts in the next few months to talk about the financial implications of Microsoft becoming more of a devices-and-services company.

He also expects that shift from selling traditional hardware to selling more subscription-based software services to cause shorter-term softer revenue but garner longer term benefits as people and companies switch from upfront license fees to recurring service fees.

As for fourth quarter results, Sherlund expects Windows revenue to be flat, with the rest of the divisions growing about 10 percent in revenue.

Young, the Morningstar analyst, said he would like to know, in particular, how tablet sales are doing — not just of Microsoft’s own branded Surface Pro and Surface RT, but also those produced by manufacturers such as Lenovo and Asus.

“Trajectory is important,” he said. “It’s important to their overall Windows OS strategy.”

Still, if sales are terrible, it’s not necessarily a nail in Microsoft’s coffin, Young said. New tablets and new hardware form factors coming out this fall may boost sales, he said.

“Hardware’s taking a bit of time to catch up to the software,” Young said.

Also coming later this year are more Haswell chips, Intel’s new long-battery-life processor, and Windows 8.1. The latter is a major update to Windows 8, which brings back popular features lacking in Windows 8, such as the ability to boot to desktop.

Similarly, if sales are great, “It’s not a reason to celebrate yet,” Young said. “They’ve got a lot of ground to make up with Apple and Android.”

Janet I. Tu: 206-464-2272 or On Twitter @janettu.