Microsoft Corporation (MSFT): Analysts Positive On Nadella Selection


Many were hoping that Microsoft Corporation (NASDAQ:MSFT) would choose an outsider who would act as a major change agent for its next CEO. The company selected cloud and enterprise VP Satya Nadella, and the more analysts look at his track record and study his first letter to employees, the more they seem to approve. But what’s especially interesting is that Bill Gates’ decision to become technical advisor is getting even more praise than Microsoft’s CEO choice.

Bill Gates tweeted his official welcome to Nadella:

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And now we’re off and running.

Nadella seen as incremental positive for Microsoft

Jefferies analysts Ross MacMillan, Aashiv Shah and Steven O’Brien said in their report that they see the selection of Nadella as an “incremental positive,” although they also say that the CEO choice wasn’t core to their investment thesis for Microsoft Corporation (NASDAQ:MSFT). In particular, they like his cloud and enterprise focus, as these areas have become more and more important to the company over time. The shift to cloud services is now an essential strategy for Microsoft, and the Jefferies team said they like the company since its commercial assets are performing better and also its shift to the cloud is gaining momentum.

Evercore analysts Kirk Materne, Ginette Rowe and Matthew L. Williams say they see Nadella as the best choice, and they picked up on something noted by Nomura analyst Rick Sherlund earlier. They think Nadella and relatively new Chief Financial Officer Amy Hood will make a great team when it comes to transforming and positioning Microsoft Corporation (NASDAQ:MSFT). They note that Microsoft’s executive team I now one of the youngest among mega-cap technology stocks.

Bill Gates’ new role looks more interesting

Analysts at both firms see Bill Gates’ decision to step down as chairman and become a technical advisor as even more of a positive than the selection of Nadella for CEO, as does analyst Matthew Hedberg of RBC Capital Markets.

Hedberg said Gates’ new role could have a positive effect on investor segment. He also notes that the selection of John Thompson to be the new chairman is a plus for Microsoft Corporation (NASDAQ:MSFT) because he brings experience in both consumer sales and enterprise. He doesn’t anticipate any major changes to the Microsoft One strategy set forth by previous CEO Steven Ballmer last year.