A New Microsoft in 1 Week


Microsoft has found itself in a precarious position over the past few years amid the broad shift to low-cost mobile computing that favors an integrated value chain. CEO Steve Ballmer has made it clear on numerous occasions that Microsoft's aiming to become a "devices-and-services" company, which is a dramatic shift from its software-centric past.

The company currently has five primary operating segments: Windows, servers, online services, business, and entertainment and devices. Ballmer could be preparing to make some major organizational changes inside the largest software company in the world, and some restructuring could be in order, according to AllThingsD.

There had been some prior rumblings to that effect, but what's disconcerting is that many senior execs reportedly know very little about the impending changes. Insiders are expecting some major changes, and they don't know where they fit into Ballmer's grand plan, which is expected to be unveiled before July 1. Microsoft's fiscal year ends this month, which could serve as the perfect timing to revamp its reporting structure for next fiscal year.

Simplifying Microsoft's operating segments could help efficiency, since the company could better focus on hardware, software, and services. The company also ousted its Windows chief Steven Sinofsky late last year, and there's uncertainty over where the Windows division would go in the new structure.

The PC value chain was segmented for decades, but now the market is beginning to favor integrated players that can incorporate hardware, software, and services all together. Microsoft doesn't have a strong track record with hardware or services, particularly from a financial perspective, so it's playing catch-up in those departments.

Investors have grown increasingly frustrated with Microsoft, and many have called for Ballmer's head. Microsoft's board continues to back Ballmer, but at least if Ballmer doesn't step down, perhaps he'll deliver an internal overhaul that could position Microsoft better as the devices-and-services company that he envisions.

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The article A New Microsoft in 1 Week originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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