By Reuters | Updated: August 22, 2024
Aug 21 (Reuters) – Microsoft on Wednesday restructured how it reports results for its business units, moving some search and news advertising revenue under the Azure cloud-computing unit as the tech giant looks to offer investors a clearer picture on AI contributions.
The company (MSFT.O) said revenue from the AI and speech technology services that its Nuance unit offers would now come under its productivity business – home to the Office suite of apps – instead of the intelligent cloud division.
The rejig will allow Microsoft to align the reporting structure with how its businesses are managed, it said.
As a result, the company restated revenue growth at its divisions for the last fiscal year and revised its forecast for July-September quarter.
Big tech companies, including Microsoft and Google, are facing investor pressure to show that the billions of dollars they have been investing in AI infrastructure would pay off.
Microsoft is one of the few big companies that break out AI contributions in their quarterly earnings, as most firms are yet to see a big boost from AI investments.
The Windows maker reported last month AI provided a bigger boost to Azure in the June quarter, even as overall business slowed. Microsoft expects Azure’s growth to accelerate in the second half of fiscal 2025.
The company expects intelligent cloud revenue to be between $23.80 billion and $24.10 billion in the first quarter, compared with its prior expectations of $28.6 billion and $28.9 billion.
Quarterly revenue at its personal computing segment is expected between $12.25 billion and $12.65 billion, compared with its earlier view of $14.9 billion and $15.3 billion, after the company moved some units from the business to the productivity division.
Productivity and business processes revenue is expected to be between $27.75 billion and $28.05 billion, compared with $20.3 billion and $20.6 billion previously.
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@ Thomson Reuters 2024
