The new Microsoft was born in February when Satya Nadella took over the CEO post from Steve Ballmer, and the company’s prospects have been on the rise ever since. Microsoft stock is up 28% in that time, and that trend should continue. That’s quite a reversal from the 14-year Ballmer era, when MSFT stock consistently lagged far behind the overall market.
In his brief tenure Nadella has shown an ability to make the tough decisions and take the risks required to get Microsoft stock moving again. The “Minecraft” acquisition fits right in with Nadella’s larger plans to rejuvenate Microsoft’s mobile business, which had languished under Ballmer.
“We believe the acquisition of the ubiquitous ‘Minecraft’ game (almost 54 million copies sold) strategically makes sense as Microsoft looks for ways to drive users toward its nascent mobile hardware business, where it can leverage and cross-sell a wide range of its higher-margin software (e.g., Office 365, Windows),” FBR Capital Markets analyst Daniel Ives said in a client note.
News on Microsoft Corporation (NASDAQ MSFT)
But when looking at Microsoft stock, we need to view the Mojang deal in the context of all the other moves that Nadella has made. “Nadella has put his seven months as Microsoft’s CEO to good use,” said Money Morning Defense & Tech Specialist Michael Robinson.
He noted that Nadella wasted no time in cutting some of the bloat at Microsoft, announcing plans to cut 18,000 jobs over the next year – 14% of the company’s workforce – with most coming from the Nokia devices unit that Ballmer bought for $9.6 billion.
“The Nokia layoffs show that Nadella has no illusions about the challenges he faces in igniting mobile sales,” Robinson said. At the same time, he thinks mobile presents a major opportunity for Microsoft.
Microsoft Corporation (NASDAQ MSFT) Business News
Some may look at Microsoft’s puny 3.5% share of the smartphone market and think it stands no chance as it goes up against the dominant mobile players, Apple Inc (NASDAQ AAPL) and Google Inc (NASDAQ GOOG), but that’s not how Robinson sees it.
“Being so far back can end up being a good thing,” he said. “Market research firm IDC notes that lower-end devices, those costing less than $200, accounted for 58.6% of all Android devices sold in the second quarter. If Nadella can simply double Microsoft’s mobile market share and do so with higher margins, that alone would represent major progress.”
Thanks for visiting the TechNews.org website. Be sure to catch all Microsoft Corporation (NASDAQ MSFT) financial news, bookmark us and check all the videos and news articles regarding the Microsoft stock.