MSFT · Forward model · More Personal Computing
What has to happen in More Personal Computing
Model as of
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More Personal Computing
The leg that is shrinking. $12.9B of revenue, down 4%, at a 21.4% operating margin - Windows OEM and devices, XBOX content and services, and Search advertising. Windows OEM and devices fell 7% and XBOX fell 10% in the quarter, and the segment carried impairment charges alongside severance in the same period Microsoft reported record profit. Search advertising is the one part growing. It is 14% of revenue and 7% of operating income, and its job in this model is to stop the other two from being flattered by a company average.
Latest: $13.15B (2031Q2E)
| Period | Value |
|---|---|
| 2024Q3 | $13.18B |
| 2024Q4 | $14.65B |
| 2025Q1 | $13.37B |
| 2025Q2 | $13.45B |
| 2025Q3 | $13.76B |
| 2025Q4 | $14.25B |
| 2026Q1 | $13.19B |
| 2026Q2 | $12.85B |
| 2026Q3E | $12.79B |
| 2026Q4E | $12.74B |
| 2027Q1E | $12.71B |
| 2027Q2E | $12.68B |
| 2027Q3E | $12.67B |
| 2027Q4E | $12.67B |
| 2028Q1E | $12.67B |
| 2028Q2E | $12.68B |
| 2028Q3E | $12.70B |
| 2028Q4E | $12.72B |
| 2029Q1E | $12.75B |
| 2029Q2E | $12.78B |
| 2029Q3E | $12.82B |
| 2029Q4E | $12.86B |
| 2030Q1E | $12.90B |
| 2030Q2E | $12.95B |
| 2030Q3E | $13.00B |
| 2030Q4E | $13.05B |
| 2031Q1E | $13.10B |
| 2031Q2E | $13.15B |
Assumptions & reasoning
- The only segment shrinking, and the only one where a model that extrapolates the company average would be badly wrong. Windows OEM and devices fell 7% and XBOX content and services fell 10% in the basis quarter.
- XBOX impairment charges appear in the same quarter's discrete items alongside severance. The operating margin of 21.4% is after them, so the basis quarter is a depressed starting point rather than a run rate.
- Search advertising is the growing part of this segment and Microsoft reports it only in the annual product table, where it rose to $15.2B. Quarterly it is invisible inside the segment total.
- At 14% of revenue and 7% of operating income, this line cannot change the fair value much. It is carried because Microsoft reports it and because folding it into the other two would flatter both.