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Why is Microsoft Corporation Surging Today?

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) has surged 0.8% higher in midafternoon trading Monday. But that's nothing next to Microsoft (NASDAQ: MSFT  ) , which posted the strongest gain on the blue-chip index today.

Microsoft shares soared 2.7% as of 2 p.m. EDT as freshly appointed CEO Satya Nadella really started taking charge of the company.

Nadella is shaking things up in Redmond. In an internal email unearthed by Bloomberg this morning, Nadella appointed new leaders for three of Microsoft's most important divisions.

When the acquisition of Nokia (NYSE: NOK  ) closes, probably by the end or April, there's a reunion in the cards. Former Nokia CEO Stephen Elop will take charge of Microsoft's hardware division, including Nokia's handset business.

Microsoft CEO Satya Nadella, showing his muscles this week. Image source: Microsoft.

However, Elop won't take over the company's Xbox operation. Both the hardware and software sides of Xbox will run under Phil Spencer, who has commanded Microsoft's video game development since bootstrapping Microsoft Studios in 2007.

Rounding out the trio of executive upgrades, Scott Guthrie takes the reins of Redmond's cloud and enterprise group. Once again, Nadella picked a guy with plenty of relevant experience: Guthrie is spearheading the Windows Azure cloud computing platform and has been deeply involved in developer operations since creating the ASP.NET programming language way back in 2002.

Investors like this quiet management makeover for at least two important reasons:

  • Nadella is appointing his own lieutenants. In particular, Nadella has worked closely with Guthrie in the cloud computing segment for several years. Ex-CEO Steve Ballmer's spirit might not linger in Redmond after all.

  • These appointments all make sense. Nadella is putting all the right experience on top of each division. If you feared that the new CEO's makeover would change things just to prove that he had that power, it's time to breathe a sigh of relief.

Nadella's promotions are taking uncertainty out of owning Microsoft shares, and that's always a good thing. If he keeps this up, Microsoft might have a shot at staying relevant in this crazy, ever-changing market.

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Anders Bylund

Anders Bylund is a Foolish Technology and Entertainment Specialist. Where the two markets intersect, you'll find his wheelhouse. He has been an official Fool since 2006 but a jester all his life.

Hypoallergenic. Contains six flavors not found in nature. Believes in coyotes and time as an abstract.

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Related Tickers

8/28/2015 4:55 PM
^DJI $16643.01 Down -11.76 -0.07%
MSFT $43.93 Up +0.03 +0.07%
Microsoft CAPS Rating: ***
NOK $6.32 Down +0.00 +0.00%
Nokia CAPS Rating: **