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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

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July 17, 2006 3:02 PM

Microsoft's new financial reporting: Less is not more

Posted by Brier Dudley

Over the past couple of years, Microsoft seemed to get more and more transparent about its financial performance. But it took a big step backward today when it announced that it will start lumping together the results of several key product groups in its financial reports.

The company said it will report the financial performance of five business units, instead of seven, starting in the 2007 fiscal year, which began July 1. It said the changes better reflect a September reorganization that created three business groups.

It may track better with internal alignments, but providing details on fewer individual units will make it more difficult for investors and the public to gauge the performance of crucial emerging businesses, including Xbox, phone software and search advertising.

Will hot businesses cover for laggards? Business solutions will be lumped with Office, making it harder for investors to tell when and how the company's investments in Great Plains Software and Navision pay off.

It will also be harder to gauge progress in the War on Google, since MSN and its Web advertising business will be lumped with Windows Live, which also sells PC security and maintenance services.

Also difficult to interpret will be the success of two promising new businesses at the company -- Xbox and mobile devices. They will be reported as a single entity, now that both units are within the Entertainment and Devices Division.

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Gadgets and games | Fun stuff I've written about lately includes Apple's iPhone, Hewlett-Packard's HDX laptop and Microsoft's Halo3. Also on the radar are new digital video boxes such as the Tivo HD and the Vudu.