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Xbox unit should be sold in Microsoft restructure, says analyst

Xbox unit should be sold in Microsoft restructure, says analyst

Mon 03 Jun 2013 3:18pm GMT / 11:18am EDT / 8:18am PDT
Business

Microsoft restructure could lead to bigger role for Don Mattrick

Sources have told AllThingsD that Microsoft chief executive officer Steve Ballmer is planning a major restructuring of the company. The plan will attempt to reconfigure the company around devices and services in consumer and enterprise markets, a focus mentioned by Ballmer in his letter to investors on October 2012.

"This is a significant shift, both in what we do and how we see ourselves - as a devices and services company. It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses. The work we have accomplished in the past year and the roadmap in front of us brings this to life," wrote Ballmer in the letter.

According to the report, certain key executives could see expanded roles, including Interactive Entertainment division Don Mattrick, Skype president Tony Bates, and Servers and Tool president Satya Nadella. The plan is also intended to simplify Microsoft's current management structure, which is currently quite complex and prone to infighting. Corporate clashes were reportedly one of the reasons for the departure of Windows president Steven Sinofsky last year, only a few weeks after the launch of Windows 8.

In a note last week, Nomura Equity Research analyst Rick Sherlund said that the planned change is due to shareholders looking for a better return on Microsoft stock. Sherlund also recommended that Microsoft should sell off its Xbox and Bing search divisions. He admitted that the Xbox division is doing well, but "it doesn't seem like a good enough business for Microsoft to focus on."

"There is a shift in the wind upcoming for Microsoft, with shareholders likely demanding a greater say in the direction of the company and how it might be run to drive a better return to shareholders. We think there are a number of things that could be done to improve the return of cash to shareholders and improve the profitability and cash flow of the business," he wrote.

"Xbox is one of the areas of success for Microsoft and is cool to consumers, but it is perhaps time to assess whether this can ever be material to the overall company and might be more leveragable to a consumer-oriented company such as Samsung. Perhaps they would be willing to pay several billion dollars for this to leverage their substantial consumer electronics business?"

9 Comments

Alex Bunch Proof Reader, ZiCorp Studios

94 106 1.1
Putting the 'anal' in analyst.

Posted:A year ago

#1

Oliver Jones Software Developer

21 21 1.0
Wow. Analysts say the dumbest shit at times. Or is that all the time?

Posted:A year ago

#2

Christopher Bowen Editor in Chief, Gaming Bus

453 724 1.6
If it happens, great; Microsoft's gotten too bloated to be good at anything, really. And it's about time Ballmer stepped up to the plate.

Posted:A year ago

#3

Norman Tajudin Operations & Strategy

8 6 0.8
Perhaps Rick either doesn't understand the Xbox/Kinect/Skype/Win8 ecosystem or he owns a ton of Sony shares! <:-0 With Skype, Microsoft owns the biggest social network in the world. With Xbox/Kinect they own the living room. With everything going to the cloud, all pieces together are worth way more than apart. Silly recommendation really...

Posted:A year ago

#4

Rick Lopez Illustrator, Graphic Designer

1,269 942 0.7
Not a bad idea, cause microsoft themselves dont know what to do with it.

Edited 4 times. Last edit by Rick Lopez on 3rd June 2013 8:46pm

Posted:A year ago

#5

Greg Wilcox Creator, Destroy All Fanboys!

2,193 1,170 0.5
And what happens when the cloud "breaks?" Even if it's only a few days' downtime, the cradle will fall along with some stock prices for a few companies, that's for sure...

Posted:A year ago

#6

Paul Jace Merchandiser

937 1,417 1.5
Sherlund also recommended that Microsoft should sell off its Xbox and Bing search divisions. He admitted that the Xbox division is doing well, but "it doesn't seem like a good enough business for Microsoft to focus on."
This quote once again proves why anyone can be an analyst and why most of them are very bad at their job. The Xbox division is the most successful division Microsoft currently has and the 360 is the defacto console in the US. Between system sales, XBL subscriptions and those ridiculous dashboard ads Microsoft is making money hand over fist. And yet this dude wants them to give all of that up??? Whatever he's smoking must be very strong.

Posted:A year ago

#7
How do you sell this to the investors - "...Bill funded with Millions of Dollars an entrance into the console game scene, after nearly three iterations, the console scene seems to be reverting to PC only platforms, and we have had a woeful launch of our latest attempt!" Under this cloud we feel its time to try and find a Chinese corporation that will pay at least some of the debt and take this off our hands - that would be a success then?

Posted:A year ago

#8

Andrew Goodchild Studying development, Train2Game

1,254 421 0.3
Not sure why anyone would buy Bing either. I use it on my wp7 as it's the built in search, but beyond that, Google has such a stranglehold as search engines go, I can't see anyone having any use unless they hope to leverage it into an inclusive environment, like MS do.

Posted:A year ago

#9

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