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.
“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.