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Microsoft's (MSFT) New Reporting Structure Will Help to See CEO Nadella's Mobile, Cloud Vision - FBR

September 29, 2015 2:45 PM EDT
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Price: $421.32 -0.03%

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    52 Buy, 7 Hold, 0 Sell

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FBR affirms Microsoft (Nasdaq: MSFT) at Outperform with a price target of $53 after the company updated its financial reporting structure late Monday.

Analyst Daniel H. Ives offered the following commentary on the new reporting structure: In our view, Microsoft's new reporting structure should help investors better measure Nadella's mobile and cloud vision with a focus on Microsoft as a productivity and platform company, a core part of his grand vision laid out to employees this past June. That said, we believe the tide continues to turn in Microsoft's favor heading into FY16, as cloud adoption appears to be picking up major momentum among enterprises of all shapes and sizes with an annual cloud run-rate of $8 billion.

The new operating structure comes at the right time as Microsoft, in our view, is experiencing an inflection in adoption for its core cloud products (e.g., Office 365/Azure), and its scalable global architecture represents a key differentiating factor that should continue to attract an increasing number of subscribers as enterprises evaluate/embrace cloud providers and their services over the coming years. In our opinion this is setting the stage for the Redmond software stalwart to become a leading force in the ongoing secular shift at enterprises from on-premise to cloud solutions and further differentiate itself from many of its traditional, mature IT stalwarts (Oracle, IBM, HP) that are stuck on an "innovation treadmill."

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