Steve Ballmer at the Microsoft CEO Summit 2013. (Microsoft Photo).
Steve Ballmer at the Microsoft CEO Summit 2013. (Microsoft Photo).

Microsoft CEO Steve Ballmer’s move to shake up the company’s internal management structure, rumored for months, will be getting lots of attention this week. It’s the first day of Microsoft’s new fiscal year, and there have been reports that the changes could be announced internally as early as today.

But regardless of the timing, one prominent analyst is warning investors not to get too excited.

“We believe some investors are thinking this will be a broad reorganization intended to reduce costs and restructure the business. That is not our expectation,” writes Rick Sherlund of Nomura Equity Research in a note to clients this morning. “We think this is more of a realignment of resources around the devices and services theme. Some may be disappointed there is not a cost savings dimension to the expected ‘reorganization.’ ”

This is also my understanding based on talking with some people inside the company in recent weeks and days. However, I’ve been hearing so many different things that it’s difficult to know exactly what to believe.

[Follow-up: Report: Microsoft Xbox chief Mattrick leaving for Zynga]

As noted by Sherlund, Ballmer’s apparent goal with the reorg is to reposition Microsoft as a “devices and services” company, which translates into a blurring of the lines between Microsoft’s existing product groups and divisions, particularly as products come to market. Xbox Music is a flagship Windows 8 app, SkyDrive cuts across Microsoft’s products, and so on. That requires a much different structure, in the eyes of the company’s top executives.

One the biggest questions is which executives and teams will come out on top in the reorg, which is where things could get especially tough. Initial reports pointed to bigger roles for Satya Nadella, president of the Servers and Tools division; Tony Bates, president of Skype division; and Don Mattrick, president of the Interactive Entertainment division, which includes Xbox.

In recent weeks, however, I’ve been hearing different names, suggesting notable roles in the new org for executives including Windows engineering chief Julie-Larson Green and Online Services chief Qi Lu. But none of this seems to be concrete for the time being.

Stay tuned, we could hear more this week, though perhaps not through an official announcement.

Comments

  • Sean Boyer

    Do the other tech giants reorg as often as Microsoft? Seems like it’s happening pretty often.

  • Guest

    Anyone thinking MS management will streamline the org and cut costs voluntarily just hasn’t paid attention over the past thirteen years.

  • Guest

    Any MS reorg that doesn’t start with “as part of this change Steve Ballmer will be resigning effective immediately” is basically worthless.

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