Microsoft has named Satya Nadella, an executive in charge of the company’s small, but growing business of delivering software and services over the Internet its new CEO.
Microsoft CEO Satya Nadella has earned high marks for his first 4 months at the helm of the software giant. His performance garnered the company’s stock an upgrade Thursday from research firm FBR Capital Markets.
FBR analyst Daniel Ives raised his rating on Microsoft stock to outperform from market perform and hiked his price target to 49 from 43.
Microsoft stock was up 1.5% near 41 in afternoon trading around the stock market today.
We have a high amount of confidence in Satya Nadella’s plan for Microsoft’s future. “With Nadella in the helm, Microsoft is off to a golden begin with his improved transparency and strategic concentrate on the mobile/cloud space.
Based on the company’s March quarter results and FBR checks with customers, Microsoft is experiencing accelerated traction in cloud computing using its core cloud Office product (Office 365) showing good subscriber momentum, he explained. Meanwhile, Microsoft’s cloud platform Azure is “growing rapidly around the heels of strong secular trends” favoring cloud offerings.
Since replacing Steve Ballmer as CEO on Feb. 4, Nadella has designed a number of moves in his “mobile first, cloud first” strategy. He’s working to transform Microsoft from a PC-centric company to one focused on mobile devices and cloud computing.
Microsoft’s cloud computing offering, Azure, and its push to have consumers buy Office software as a $100-a-year Office 365 subscription are seen as the biggest drivers of Microsoft’s growth in the next couple of years. Both businesses saw the number of customers more than double in the last three months of the year, compared with a year earlier.
Those businesses, along with other back-end offerings aimed at corporate customers, are the main reason why investment fund ValueAct Capital invested $1.6 billion in Microsoft shares last year.
Ives said his major concerns with Microsoft are the way it manages the recent acquisition of Nokia’s handset business and it is efforts to get traction because of its Surface tablets.
“In a nutshell, while its mobile strategy remains a ‘prove me’ situation, we feel Microsoft’s intertwined focus with the cloud can help breathe new life into miracle traffic bot behemoth over the coming years,” he wrote. “The ‘Nadella era’ at Microsoft seems to be off to a good start, because the software veteran is showing openness in the strategy/vision while veering away from the status quo, representing a breath of fresh air for investors.”