Vulcan Capital, the family investment office of Microsoft co-founder Paul Allen, believes the new CEO should explore a spinoff of the consumer business, the Financial Times reported. The firm cited the fact that Microsoft generates the vast majority of the its earnings from selling software and services to enterprise clients.
“The search business and even Xbox, which has been a very successful product, are detracting from that. We would want them to focus on their best competencies,” Paul Ghaffari, who manages Vulcan Capital, said at the Financial Times Investment Management Summit in New York, the paper reported.
“My view is there are some parts of that operation they should probably spin out, get rid of, to focus on the enterprise and focus on the cloud,” he said
Will Microsoft now decide to do on its own what the government tried to force it do over a decade ago? While it will certainly be easier for a new CEO to execute a spin than it would be for longtime CEO Steve Ballmer, we believe it is still unlikely to happen given Bill Gates’ continued influence at the company he founded.
Disclosure: The author holds shares of Microsoft
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This is really interesting. A Microsoft spinoff would perform very well I think. There are some fast growing segments within the company that can’t be given the multiple premium they deserve because they are part of the conglomerate.