Financials: Company value
Ever since Ballmer announced his retirement, Microsoft's stock has performed quite well. When Nadella took over on Feb. 4, 2014, the stock closed at $36. A year later, it was at $42, after a major (16 percent) drop last week as the market digested Microsoft's continued softness in its current product lines. Still, that's a 13 percent increase in a year. Over the same year, Apple's stock is up 67 percent, but Google's Class A stock is down 6 percent.
Rightly or wrongly, many financial analysts blamed Nadella for Microsoft's current weakness and the last week's drop in valuation. Factoring in the stock market's assessment, Nadella has earned a solid C for his company value grade.
Financials: Corporate financials
Microsoft's financials in general have gone well. Revenue for the quarter, reported on Jan. 26, was $26.5 billion with profits at $5.9 billion. Revenues rose 8 percent, though largely due to the acquired Nokia phone business; profits declined 1.6 percent, due to currency shifts, a renewed slump in Windows PC sales, restructuring costs related to the Nokia acquisition, and lower per-unit profits on phones than other devices and services. Financial analysts predicted as much, so were unfazed.
Of course Nadella inherited a very profitable company, but the numbers are certainly going his way — despite last week's stock-valuation drop.
For corporate financials, Nadella earns a grade of B+.
Nadella's overall grades
If you look at Microsoft as a company — in other words, as a profit-making enterprise — there's no doubt Nadella is doing well. The lack of a home run in consumer products, which are driving Apple's capitalization to nosebleed levels, has kept revenue and earnings in the substratospheric realm. Still, Nadella's kept the cash churning, the cash cows baying, and the investors grinning. As far as Wall Street is concerned, he's earned a B.
On the Windows/Office front, Nadella's definitely doing better now than he was six months ago. Unleashing Office on all platforms and slashing his Vorpal blade through the corpse of Windows 8 both certainly help. Still, the whole world's waiting to see what he can pull out of the Windows 10 hat. He's earned a B grade to date for WIndows and Office.
Although Nadella espouses mobile first, we're still waiting to see what he can do with Microsoft's own smartphones and tablets. Unless Nadella sells off Lumia — which might not be a bad idea, if a suitable Windows-fanatical suitor can be found — he's under a lot of pressure to put his hardware where his software is. For mobile, Nadella has earned only a C grade, and we all expect better.
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