3 Reasons Microsoft Has Finally Turned It Around

• The share price of Microsoft Corporation MSFT has appreciated 23.46 percent over the past month, reaching a high of $54.25 on October 26.
• FBR & Co.’s Daniel H. Ives has maintained an Outperform rating and price target of $60 on the company.
• Ives believes that Nadella has made three major strategic changes over the last 18 months that have helped the company turn around.

Analyst Daniel Ives mentioned that the “three major fundamental and strategic changes” made by Nadella include realizing that the Nokia Corporation (ADR) NOK acquisition would not be a success and taking action accordingly.

In addition, Microsoft has undertaken significant headcount reductions in order to grow free cash flow and margins, while focusing most of the company’s resources and efforts on the cloud initiatives.

Ives also said that the development of “the flagship Windows 10 platform” was the third strategic move by the company.

Ives expressed optimism regarding Microsoft’s “genius move” to distribute Windows 10 through free downloads, thereby aggressively wooing the developer community.

In addition, according to the FBR report, “Microsoft's new reporting structure should help investors better measure Nadella's mobile and cloud vision with a focus on Microsoft as a productivity and platform company, a core part of his grand vision laid out to employees in June.”

Ives also expressed optimism regarding Microsoft’s prospects heading into FY16, following the robust September quarter results, driven by cloud adoption gaining momentum among enterprises at an annual run rate of over $8 billion.