Question

In: Finance

Explain why Microsoft's culture under Ballmer resulted in poor financial performance and why Microsoft's culture under...

Explain why Microsoft's culture under Ballmer resulted in poor financial performance and why Microsoft's culture under Nadella generated very good financial performance.(answer in 40 sentences)

Solutions

Expert Solution

Satya Nadella’s personality is the total opposite of Steve Ballmer, which has led to a huge cultural change for the better.

STEVE BALLMER

You will never meet anyone with more passion and drive than Steve Ballmer. He is an inspirational leader, and at 6 foot 5 inches tall, and booming voice, has a sometimes intimidating presence. Steve joined Microsoft in 1980, and became CEO in January of 2000, when Microsoft’s revenue was just $20 Billion. Over the next 14 years Steve Ballmer grew revenues to an astounding $87 Billion. He increased profits by 215% to $23 Billion. Azure and Cloud revenue was already at $4.4 Billion when Steve Ballmer left as CEO. But, the stock price didn’t reflect this amazing growth, and remained stagnant for much of the decade.

SATYA NADELLA

Satya Nadella’s strengths are very different. He brought a calm, deliberate, and people centered approach that changed the culture at Microsoft, and changed the outside perception of the company. He also brought more focus to Azure “Intelligent Cloud” and to Artificial Intelligence, which captured Wall Street’s attention. In 5 years Satya grew revenues to $126 Billion, an increase of 45% in total, or about 9% per year. Yet, the stock price increased from about $40 per share to $138 per share today, an increase of 245%. So, while revenues grew only 45%, Wall Street rewarded the company with a 245% increase in stock price. That is what a change in perception can do.

So, is Satya Nadella a better CEO than Steve Ballmer?

It is too early to tell. Steve was CEO for about 14 years, and grew revenue by 215%. Satya has been CEO for a little over 5 years, and has grown revenues by 45%. But, the stock price increased an astounding 245%. Steve already started to push to the Cloud and Azure. Satya has brought more attention and focus to it.

I would say the biggest change Satya has made is in the culture, employee satisfaction, and outside perception…which has translated into a huge increase in employee morale and the stock price. Everyone at Microsoft has stock options, so the stock price increase alone would increase morale.

I don’t think anyone other than Steve Ballmer could have successfully succeeded Bill Gates. Steve was the right choice for that time. Satya was obviously the right choice to move Microsoft forward from the struggles of the 2010 decade. Both are outstanding CEOs in their own way.


Related Solutions

List a few key events and explain why they occurred and financial effects that impacted Microsoft's...
List a few key events and explain why they occurred and financial effects that impacted Microsoft's shareholder's equity in 2016. STOCKHOLDERS’ EQUITY STATEMENTS (In millions) Year Ended June 30, 2016 2015 2014 Common stock and paid-in capital Balance, beginning of period $68,465 $68,366 $67,306 Common stock issued 688 634 607 Common stock repurchased (3,689) (3,700) (2,328) Stock-based compensation expense 2,668 2,574 2,446 Stock-based compensation income tax benefits 0 588 272 Other, net 66 3 63 Balance, end of period 68,178...
What role does organizational culture play in the success of an organization’s overall financial performance? Explain...
What role does organizational culture play in the success of an organization’s overall financial performance? Explain Your answer.
Explain Lewis s 'solution' to the 'culture of poverty' orientation of poor Mexican families.
Explain Lewis s 'solution' to the 'culture of poverty' orientation of poor Mexican families.
Non financial performance indicators (NFPI's) are becoming more popular when measuring performance. Explain why that this...
Non financial performance indicators (NFPI's) are becoming more popular when measuring performance. Explain why that this is the case.
Compare financial and non-financial performance, and explain why planning and control systems should consider both.
Compare financial and non-financial performance, and explain why planning and control systems should consider both.
Explain why the earnings per share (EPS) may not be an appropriate measure of financial performance?
Explain why the earnings per share (EPS) may not be an appropriate measure of financial performance?
Locate the financial statements of Microsoft's segmented financial information. Prepare an overview of what is revealed...
Locate the financial statements of Microsoft's segmented financial information. Prepare an overview of what is revealed about the company through its segmented data. Discuss the benefits of reporting financial information this way. We report our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting. All differences between our internal management reporting basis and accounting principles...
" Group dynamics are essential; however, poor team dynamics would result in poor performance and, in...
" Group dynamics are essential; however, poor team dynamics would result in poor performance and, in extreme cases, could lead to the dissolution of the team (Myers, 203). " Can you give an example of how group dynamics were essential in a positive way? Then, an example of how poor dynamics resulted in poor performance and/or dissolution or team member being "voted off the team"?
1. Why is the study of financial management important? Offer examples of how poor financial management...
1. Why is the study of financial management important? Offer examples of how poor financial management can ruin a company. Provide specific real-life examples to back up your assertions. 2. Pick a decade (from 1920’s to today) and discuss the market performance in that 10 year period. What were some of the major drivers of performance during that decade?
1. Why is the study of financial management important? Offer examples of how poor financial management...
1. Why is the study of financial management important? Offer examples of how poor financial management can ruin a company. Provide specific real-life examples to back up your assertions. 2. Pick a decade (from 1920’s to today) and discuss the market performance in that 10 year period. What were some of the major drivers of performance during that decade?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT