Microsoft Corporation (NASDAQ:MSFT) was once the Apple Inc. (NASDAQ:AAPL) of Wall Street. In December 2000, its market cap was the biggest in the world at $510 billion, and many thought Microsoft would be atop of the tech world in perpetuity.
Of course, that didn’t happen. Apple and others shot out to the front of the innovation line, and MSFT languished for years.
Until Satya Nadella came on board.
You could look back to a year ago and try to find some problems with how MSFT was valued, or what analysts were saying at the time. But gauging what Microsoft has done — and can accomplish moving forward — can be as simple as analyzing the style and qualities of its CEO.
What Was Old Is New Again
While some investors might have been skeptical of Nadella’s ability to help Microsoft catch the competition, the rise of MSFT stock since Nadella’s appointment to CEO tells a pretty clear story.
Previous CEO Steve Ballmer seemed to have tunnel vision limiting his awareness of Windows and Office to PC over mobile. In turn, Ballmer’s Windows failed to think critically about its users, and his lack of vision saw Apple transition its iPod success into iPhone dominance.
Whereas Ballmer thought like a businessman, Nadella thinks like a programmer: Because of this, Nadella has made Windows 10 much more cohesive, enabling programmers to write an app for one version of Windows 10 and port it over to another version with minimal effort.
Microsoft is now platform-agnostic, with Nadella mending Microsoft’s relationships with former rivals to produce free versions of Outlook on competing devices and an official version of Microsoft Office on iOS.
What’s more, Nadella’s Microsoft isn’t comfortable with the status quo of productivity apps, but instead it wants to change the productivity game completely. Enter new and reinvented Windows products such as HoloLens, Delve, Sway and the touch-based Office suite.
Not without faults, Nadella made a huge gaffe at the Grace Hopper Celebration of Women in Computing when he issued a comment many derided as sexist. The sincerity of his apology, however, coupled with an authentic desire to learn from his mistake reflects not only Nadella’s personal integrity, but embodies the new corporate brand of the Microsoft — learning from past errors to build stronger relationships with its consumers and confidence from its investors.
An Exciting New World for MSFT
Nadella’s meek presence isn’t exactly what one would describe as “energetic,” at least not in the literal sense of the word. But since taking over, Nadella has provided an uptick in employee satisfaction — great news for investors who research the quality and care put into corporate products. As noted by Business Insider, MSFT employees have raved about the “exciting” new Microsoft:
“One engineer told us that it could be frustrating to have all these brilliant people working at Microsoft, then see their work slammed in the press because Microsoft was considered to be old and out of touch. But thanks to surprises like Office for iPad and the HoloLens, the press is starting to pay positive attention again. This person also told us that Nadella is a lot more transparent and open than Ballmer was, and so people feel freer to try new things.”
Since Nadella took the reins from Ballmer on Feb. 4, 2014, MSFT stock is up roughly 15% to just beat the Dow Jones Industrial Average. Not only is MSFT stock currently at its highest level since 1998, but Microsoft just celebrated the largest bond sale in corporate history — $10.75 billion, topping last week’s $6.5 billion deal from AAPL.
Why celebrate bonds? Well, the current climate of bond financing is an attractive option for companies like MSFT that have the credit ratings and financial stability to secure favorable rates. Satya Nadella understands this, so MSFT is loading up with cash to grow.
Under Satya Nadella, Microsoft is now an increasingly diverse company, an exciting prospect and a gripping redemption story.
For now, MSFT stock appears to be in able hands.
As of this writing, John Kilhefner does not hold a position in any of the aforementioned securities.
