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Nadella leaves no doubt about who is in charge in first six months as CEO

Juan Carlos Perez | Aug. 8, 2014
He's had his share of hits and misses but he's made his presence felt from the start

Nadella's first semester also included the end of support for Windows XP in early April, which had been announced years ago but still caused much controversy, due to the immense installed base of the trusty but ancient desktop OS. Microsoft stood its ground, sticking with its plan to end XP support, despite pleas from many for an extension.

Under Nadella, Microsoft's earnings reports so far have been viewed as solid, if not necessarily stellar. Nadella was appointed CEO about a month into the third quarter, which ended with revenue coming in at $20.40 billion, down from $20.49 billion a year earlier. Net income was $5.7 billion, down from $6.1 billion. However, Microsoft's results matched the revenue consensus forecast of analysts polled by Thomson Reuters and exceeded their earnings-per-share estimate.

Meanwhile, revenue shot up 18 percent in the fourth quarter, although profit shrunk. Revenue for that quarter, ended June 30, was $23.4 billion, ahead of the consensus analyst estimate of $23 billion. The revenue figure included $2 billion from the Nokia Devices and Services business that Microsoft acquired. The Nokia business, however, dragged down profit with an $0.08-per-share loss. Total net income was $4.6 billion, down from $4.9 billion a year earlier, and below analysts' consensus expectation.

On balance, shareholders seem to be giving Nadella a vote of confidence. Company shares, which were hovering around $37 right before his appointment, have been in the $43 range in recent days. Whether that optimism lasts will depend on the fruits of Nadella's strategy.


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