Microsoft Layoffs Won't Derail Its 'Aggressive' Strategy Against Apple
Microsoft's (NASDAQ: MSFT) headcount may plummet, but the company's core initiatives are likely to move forward as planned.
Last year the company opened a large number of stores throughout the United States. Many of these outlets have popped up in malls where Apple (NASDAQ: AAPL) has already set up shop. Ivan Feinseth, the chief investment officer of Tigress Financial Partners, told Benzinga that he thinks Microsoft will continue to be "aggressive to hit every market" that Apple is in.
"It seems that what helps the Surface sell is the interactive experience with it," said Feinseth. "The fact that people see it in these high-traffic malls and high-traffic areas and play with it -- I think that's been the biggest sales driver."
The Greater Good
Microsoft's massive restructuring plan could reduce the company's workforce by up to 18,000 individuals. According to Feinseth, most analysts did not expect more than 9,000 jobs to be cut. On July 15, the restructuring expectations were even lower.
"It is positive in the sense that the company is realigning their focus to software cloud services [while] streamlining the company and improving operations," said Feinseth. "Unfortunately, it's negative when they announce layoffs for the people being laid off. But it's positive for the stock. It reduces costs. They're probably going to outsource a lot of their manufacturing jobs. It's a net positive for shareholders."
Goodbye Manufacturing, Hello Contractors
Feinseth said that he does not see any reason for Apple, Microsoft or Sony to be in the manufacturing business.
"Manufacturing is a low-return, capital-intensive business," he explained. "Product design and creation and marketing is a non-capital-intensive, high-return business. To the extent that you want to manufacture something, you can have that done on a contract basis, [which] is always better."
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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