Microsoft’s business pattern is changing, and their failure to adapt quickly has hurt their stock.
Microsoft shares were down nearly 1%, to $68.52, in mid-morning trading Thursday. Microsoft’s surface computer line hasn’t been selling as well as the company would’ve hoped, down 26% in the third quarter. Microsoft’s PC sales were subsequently hurt, down 7%, and yet sales of the Cloud doubled.
Microsoft is responding by implementing a restructuring plan that involves the laying off of overseas sales staff, led by marketing officer Chris Capossela, and executive vice presidents Judson Althoff and Jean-Philippe Courtois. Monday, the three executive notified employees of a reorganization but didn’t mention layoffs, according to USA Today. Thursday, they began to do so.
“Microsoft is implementing changes to better serve our customers and partners,” Microsoft said in a statement to USA TODAY. “Today, we are taking steps to notify some employees that their jobs are under consideration or that their positions will be eliminated. Like all companies, we evaluate our business on a regular basis. This can result in increased investment in some places and, from time-to-time, re-deployment in others.”
Cloud-based sales to slowly outstrip PC sales is part of Microsoft’s long term plan moving forward, as executive vice president Judson Althoff has outlined a sales strategy in which Microsoft Assure’s cloud-computing service is the centerpiece.
Long-time Microsoft analyst Jack Gold says the realignment has prompted a move from on site sales support to telephone support.
“This is not the first realignment Microsoft is undertaking due to the shift to cloud, and it’s unlikely to be the last one,” Gold says.
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