Microsoft Corporation Makes Room for Elop

What should investors should watch for with Microsoft’s recent management reshuffling?

Mar 1, 2014 at 3:45PM

As Meg Whitman at Hewlett-Packard and, more recently, John Chen at BlackBerry remind us, corporate turnaround artists are a rare but highly valuable breed. Although perhaps overshadowed of late by either executive, incoming Microsoft (NASDAQ:MSFT) executive Stephen Elop himself deserves plenty of credit for pulling Finnish smartphone firm Nokia out of a vicious tailspin that threatened to take Nokia down eventually. And as Microsoft prepares to close its $7.2 billion buyout of Nokia's handset division, new Microsoft CEO Satya Nadella recently reshuffled his management ranks to prepare to welcome Elop back under Microsoft's corporate umbrella.

However, this move isn't without its risks for Microsoft and its investors.

The good and bad of Elop's return
Before Nadella's tenure began atop Microsoft, longtime CEO Steve Ballmer reshuffled Microsoft's corporate structure. And in keeping with this new structure, Nadella recently made room for Elop to run Microsoft's Devices and Studios segment. Appointing Elop to this position is something of a no-brainer, as the division will house Microsoft's hardware businesses, including Nokia's incoming handset division.

However, the role will also put Elop in charge of reviving two of Microsoft's more challenged products of late -- its Surface line of tablets and its Xbox division. Thus far in its several years of existence, the Surface has yet to become more than a niche player in the tablet market, despite plenty of support on Microsoft's part. Similarly, Microsoft launched its Xbox One in time for the holiday season, but it has steadily lost ground to Sony's PlayStation 4 in the past several months. And it's Elop who will need to right the ship for both of these headache-inducing products as he returns to Microsoft in the coming months.

In the following video, tech and telecom analyst Andrew Tonner looks at Microsoft's recent management moves and why they matter for investors.

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Andrew Tonner 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 don't 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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