Can Microsoft Thrive In A Mobile World?

Summary

• New CEO Satya Nadella is transforming Microsoft with a “cloud-first, mobile-first” strategy, and investors are intrigued.
• MSFT has low P/E and EV/EBITDA ratios compared to competitors, yet a PEG forward of 2.2 may be a cause for concern.
• Cloud OS and Office 365 are the current drivers of Microsoft’s growth, while Windows OS is on the decline due to the shift away from PC.
• MSFT is focusing greater effort on the mobile market with its acquisition of Nokia, but it has a tough battle ahead against AAPL and GOOGL.
• With $85.7 billion in cash on hand and its recent cost-cutting measures, Microsoft certainly has the financial muscle to carry out its restructuring efforts.

Satya Nadella, Microsoft’s (NASDAQ:MSFT) new CEO as of February 4th, has vowed to transform the previously PC-based business, reshifting its focus toward cloud and mobile and cutting costs by divesting underperforming segments. With the introduction of Office 365 for iPad in March, the purchase of Nokia in April, a mass layoff of 18,500 employees in July, and rumors of the sale of Xbox Entertainment Studios just last week, we are certainly beginning to see these changes come into action…

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