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Summary

  • Microsoft's new leader is making executive changes.
  • Focus has been on executives, not on Microsoft.
  • Apple headlines are positive about new CFO.

Chalk it up to the press. Microsoft's (NASDAQ:MSFT) new Chief Executive, Satya Nadella, makes some changes, and what do the headlines read…

In the New York Times, we read "From Politics to Advising Microsoft's Chief, Not Without Noise." The article is about Mark Penn, political advisor to Bill and Hillary Clinton. Oh, and what does Mr. Penn have to do with Microsoft. Well, former CEO, Steve Ballmer hired Mr. Penn, made him a senior advisor and later let him oversee advertising.

And, what does Mr. Penn bring to the table?

In an email that went out to Microsoft employees on Monday afternoon, "Mr. Nadella praised Mr. Penn for his 'blend of data analysis and creativity,' which recently helped shape an ad campaign that began during the Super Bowl.

'His focus on using data to quickly evaluate and evolve our campaigns has driven new insights and understanding,' Mr. Nadella wrote. 'Mark and his team also will continue to provide input in the area of competitive research and analysis.

I am looking forward to applying Mark's unique skill set across a broader set of challenges facing the company, from new product ideas to helping shape the overall areas of strategic investment.'"

In other words, Mr. Penn is going to help Mr. Nadella and Microsoft to get to know the market better.

The Financial Times also put its focus on Mark Penn, the former adviser to Bill and Hillary Clinton. And what are the main things this article focuses on?

Well, Mr. Penn is "Famous for helping to mastermind Bill Clinton's move to the political center two decades ago and a strategist for Hillary Clinton's 2008 campaign... "

Furthermore, "He used the platform for a campaign called "Scroogled" that attacked Google over issues such as privacy, though the move was controversial inside Microsoft, where some saw it as a tactic better suited to political campaigning."

The word incorporated in these two articles is that no one seems to be neutral about Mr. Penn, either inside Microsoft or outside.

Now, the news coming out about Apple Inc. (NASDAQ:AAPL): yesterday, Apple announced that it was appointing a new CFO. In the Financial Times, the New York Times, and the Wall Street Journal, the praise for the appointment of Luca Maestri as Apple's new chief financial officer was unanimous, as were the accolades for the outgoing CFO, Peter Oppenheimer.

Why the praise? Well, it seems as if Mr. Maestri, according to the Wall Street Journal article, has "a record of shareholder-friendly policies and extensive international experience." The Financial Times and New York Times articles back this up.

The first is important, because this "change comes as some shareholders, including activist Carl Icahn, are pressing Apple to distribute more of its $159 billion in cash."

The second is important, because "nearly 80 percent of its cash is held overseas and Apple would have to pay taxes to bring it back to the U.S."

Mr. Maestri worked for 20 years in Europe at General Motors (NYSE:GM) "culminating in his position as finance chief of its European operations. He also worked in Asia and South America." He managed operations in more than 45 countries.

He left General Motors to become chief financial officer for Nokia Siemens Networks, and then became CFO at Xerox (NYSE:XRX), where he sharply increased its share repurchases in the two years he was there.

What comes across in these articles? Apple has appointed a bright star, generally applauded, to help guide its financial affairs and promote things that will make shareholders happy.

Microsoft is appointing someone who is controversial, and who is going to use his skills in data mining to find out what customers want.

What is the message here? Apple cares about shareholders, and Microsoft doesn't!

This seems to be consistent with the fact that Apple's stock price has risen… almost continuously... since 2003. And, Microsoft's stock price has been basically flat since the summer of 2000 until Mr. Ballmer left office.

This is something that Mr. Nadella is going to have to take account of… and hasn't, as of this time. People have stated that one of Microsoft's problems is that it is subject to "navel-gazing"… that it is too focused on itself and what is going on internally… and this is one reason it misses things.

It's not as if Microsoft did not seem to have a first-class CFO in Amy Hood. Ms. Hood became CFO on May 8, 2013, having worked at Microsoft since 2002. She gained her initial training at Goldman Sachs (NYSE:GS) in the investment banking and capital markets group… not too shabby. On coming to Microsoft, she worked in investor relations… so, she has worked with shareholders. She then got experience as chief of staff in the Server and Tools Business, before running strategy and business development in the Business Division, before becoming CFO of the division in 2010.

Not a bad background, but we hear very little about her and her role in the financial affairs of the company. And she has supporters. Charles Cooper, a senior editor at CNET, "one of the sharpest execs on Microsoft's roster."

The cloud hanging over here is that she was made CFO of the company by Steve Ballmer. The question here concerns her independence of Ballmer's way of thinking that did not please shareholders. Furthermore, Ms. Hood has been at Microsoft almost all the time that the stock price has been flat-lining. We hear nothing about her ability to stand up for the interests of shareholders the way Mr. Maestri and Mr. Oppenheimer have.

A possible piece of good news is that she has had a working relationship with Mr. Nadella before… in the Server and Tools business. They are not strangers to working closely together.

Again, the book is out on the new leader at Microsoft and the team he is assembling. As I have said, I hope that they succeed. The problem is, the initial press that is coming out doesn't seem to be conveying a sense that Mr. Nadella is providing a coherent vision of the future and the goals Microsoft will be striving for.

I know that the management of Microsoft does not control the price of Microsoft stock. But what the management does and says frames the image of what things will be addressed… and what things will be of a lesser priority. The navel-gazing that took place under Mr. Ballmer did not seem to make shareholders happy. Maybe Mr. Nadella needs to pay attention to this shortcoming and try to take the focus off "A data-driven former campaign strategist for the Clintons."

Source: Microsoft Vs. Apple In The Headlines