The whole of Microsoft is currently less than the sum of its parts. That was one of the underlying assertions in Goldman Sachs' latest report on the Redmond company, which included a case for spinning off Microsoft's video-game business to unlock what the firm sees as the true value of that division.

The Goldman Sachs report, and accompanying downgrade, helped to push Microsoft shares down about 2 percent in trading today, to close at $23.91. The firm's recommendations have drawn a range of responses. Aalyst Matt Rosoff tells ComputerWorld that it would be "silly" to carve out the Xbox business, and Paul Kedrosky says that Microsoft is just as likely to "start bending spoons with its mind."

But reading through the 27-page report, it's clear that Goldman Sachs at least did its homework. Whether or not people agree with their conclusions, the analysts spent a ton of time coming up with valuations for each of Microsoft's five major businesses, "deconstructing the company" using a variable mix and weight of price/earnings, enterprise value and free cash flow, depending on the division.

Here are the valuations the analysts came up with, and their summary statements assessing the state of each division.

Windows/Windows Live: $107.2 billion. Windows 7 cycle likely to remain robust over the next three years, given XP support expiration. ... Our recent CIO survey data suggests that PC refresh cycles are beginning to elongate as budget pressure begins to surface ... In addition, the rise of tablet computing adds a new risk to Microsoft’s dominant PC and Office franchises. ... Price/mix headwind also a headwind longer term as PC demand shifts more and more to emerging markets characterized by piracy and price pressure.

Microsoft Business Division: $99.6 billion. Opportunities: Office 2010 powerful cycle near term, shift to SaaS an opportunity and a threat. ... Office 2010 Product cycle likely to drive earnings near term. Competitive advantage in certain SaaS/Cloud-enabled applications ... Headwinds: Core products mature, shift to SaaS may create some headwinds.

Server & Tools: $43.4 billion. Azure has the potential to be a dominant player in the public cloud space. ... Increased traction of Azure could potentially serve as gateway to increased customer interest in Microsoft’s server virtualization product – Hyper-V. ... Hyper-V is still years away from being a serious competitor of VMware in our view.

Entertainment & Devices: $3.6 billion. Kinect expands the addressable market and could be key to higher profitability. ... Xbox Live one of the largest paid Cloud communities in existence, offering Microsoft a door into the highly sought after consumer living room. ... The division is yet to turn profitable, once corporate overhead is allocated.

Online Services: $4.9 billion. The Online Services Division remains Microsoft’s least profitable business. While Bing continues to post consecutive gains, the division is unlikely to generate profitability for another 2-3 years (Microsoft projects break-even performance at a 20%-25% US search market share), unless the company pursues a scale-enhancing acquisition.

That "sum-of-the-parts" analysis adds up to an aggregate value of $259 billion (about $30 a share) -- $52 billion more than the company's current market cap of slightly less than $207 billion.

We've got a good discussion taking place on our original post on the Goldman Sachs report, and it will be interesting to hear what people think of these specific divisional valuations, and the contention that some of Microsoft's divisions would be stronger on their own than they are together.

Follow-up: Take that, Goldman Sachs? Ballmer defends Xbox spending