3 Comments

Summary:

Analysts, many of whom were sick-and-tired of prior Microsoft management, approved of Satya Nadella’s performance.

Satya Nadella delivered the opening keynote to kick off the 2014 Microsoft Build developer conference which runs through April 4.  (Photo by Justin Sullivan/Getty Images)
photo: Justin Sullivan/Getty Images

You could almost feel a wave of relief on Thursday’s Microsoft earnings call.  The usual analysts were on and probably quite a few first-time attendees who wanted to catch new CEO Satya Nadella’s first-ever interaction with analysts on the quarterly call.

Nadella was very reassuring about the company’s willingness to reassess its game plan and adjust as needed as it moves along. “I feel as the leadership team we have really picked up the pace on asking the hard questions, what is the believability of any of our plans and pushing ourselves,” Nadella told analysts.

And this:

“What you can expect of Microsoft is courage in the face of reality. We will approach our future with a challenger mindset. We will be bold in our innovation. We will be accountable to our customers, partners and shareholders.”

And, judging from the post mortems from analysts — many of whom were clearly ready for the post-Steve Ballmer era — he hit it out of the park. One SeekingAlpha post was:  Satya Nadella forced me to go long on Microsoft  (SeekingAlpha also has the full earnings call transcript here.)

Nomura Securities analyst Rick Sherlund, who was early to flag institutional shareholder dissatisfaction with former CEO Ballmer, was likewise encouraged. In a research note titled “Quirky but in a good way,” Sherlund noted that Nadella set a precedent in connecting with investors on the call.

“We inquired about the gross margins of the newer subscription and cloud businesses and Mr. Nadella disclosed that while Azure is still negative the others are positive and ramping up. This dynamic is important in how the Street will model the next several years as the traditional high margin products are delivered as a service with less up-front revenues.”

Bernstein Research analyst Mark Moerdler was encouraged by what he saw as the “overall strength and speed of” Microsoft’s transformation to cloud.

On Friday, Microsoft shares opened up at $40.29, up 1.07 percent from their Thursday close of $39.86.

 

 

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  1. SeekingAlpha transcript link points to Amazon.com’s Management Discusses Q1 2014 Results – Earnings Call Transcript vs. Microsoft earnings call script

    1. my error fixing. thanks

  2. Vinay Deshpande Monday, April 28, 2014

    It’s fair to be bullish on Nadella. But Microsoft is a beast and one that takes precious time to move. Also, it needs the right people. To deliver on his words, Nadella needs to change mindsets or bring in fresh blood (‘Change people or change People’). He surely did not hire/fire in a hurry, and that’s a good thing. But it’s no mean task to get an old dog learn new tricks. Can’t wait for the earnings call a year from now.

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