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Microsoft reorg: Don’t expect big cost-cutting, says analyst

Microsoft CEO Steve Ballmer’s transfer to shake up the corporate’s inside administration construction, rumored for months, can be getting numerous consideration this week. It’s the primary day of Microsoft’s new fiscal yr, and there have been stories that the modifications could possibly be introduced internally as early as today.

However whatever the timing, one outstanding analyst is warning traders to not get too excited.

“We consider some traders are considering this can be a broad reorganization supposed to scale back prices and restructure the enterprise. That isn’t our expectation,” writes Rick Sherlund of Nomura Fairness Analysis in a notice to shoppers this morning. “We predict that is extra of a realignment of sources across the units and companies theme. Some could also be disenchanted there may be not a value financial savings dimension to the anticipated ‘reorganization.’ ”

That is additionally my understanding based mostly on speaking with some individuals inside the corporate in current weeks and days. Nonetheless, I’ve been listening to so many alternative issues that it’s tough to know precisely what to consider.

[Follow-up: Report: Microsoft Xbox chief Mattrick leaving for Zynga]

As famous by Sherlund, Ballmer’s obvious objective with the reorg is to reposition Microsoft as a “units and companies” firm, which interprets right into a blurring of the strains between Microsoft’s present product teams and divisions, notably as merchandise come to market. Xbox Music is a flagship Home windows 8 app, SkyDrive cuts throughout Microsoft’s merchandise, and so forth. That requires a a lot totally different construction, within the eyes of the corporate’s high executives.

One the most important questions is which executives and groups will come out on high within the reorg, which is the place issues may get particularly powerful. Preliminary stories pointed to greater roles for Satya Nadella, president of the Servers and Instruments division; Tony Bates, president of Skype division; and Don Mattrick, president of the Interactive Leisure division, which incorporates Xbox.

In current weeks, nevertheless, I’ve been listening to totally different names, suggesting notable roles within the new org for executives together with Home windows engineering chief Julie-Larson Inexperienced and On-line Providers chief Qi Lu. However none of this appears to be concrete in the intervening time.

Keep tuned, we may hear extra this week, although maybe not by way of an official announcement.
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