Microsoft Is Trying To 'Undo' Steve Ballmer's Mistakes

Microsoft Corporation MSFT is restructuring its phone business less than two years after acquiring the mobile division from Nokia Corporation (ADR) NOK.

Rich Tullo, Director of Research at Albert Fried & Company, compared Microsoft's situation to Sony Corp (ADR) SNE.

"Like all these businesses that Sony is getting into, hyping the s*** out of it and doing nothing with it, Microsoft had the same thing under the old CEO," Tullo told Benzinga. "Now you see the new CEO undo all that, focus on enterprise on the cloud."

This is the latest in a series of changes made by current Microsoft CEO Satya Nadella.

"Last week he got rid of a large part of their internal sales function on Bing, which they had been running," said Tullo. "[He] essentially gave it to AOL for a profit-sharing arrangement and transferred over the employees. So no longer is Bing running an internal ad network like AdSense is for Google. That's going through AOL now."

Related Link: Apple Music Could 'Open The Door' To TV Service

Cody Willard, chairman of Scutify and Futr, welcomed the latest restructuring announcement.

"The good news is they've restructured almost everything they could have restructured that was bought under the foolish Steve Ballmer regime," Willard told Benzinga. "Now that you have the Nadella regime, they're cleaning out the kitchen sink. The Steve Ballmer era of Microsoft has been written off as of today."

Xbox Music Got Into The Groove

In addition to the other changes, Microsoft recently re-branded Xbox Music as Groove and Xbox Video as Movies & TV. Analysts don't expect the change to have a positive impact.

"Microsoft is looking to get out of all that," said Tullo. "They're positioning to divest or let these products die."

Tigress Financial Partners analyst Ivan Feinseth said he liked the Xbox moniker.

"Xbox was a good name," Feinseth told Benzinga. "Groove music? I thought that term went out with the 60s."

Willard questioned whether or not it actually matters.

"The [actual] Xbox [hardware] isn't even meaningful to Microsoft," said Willard. "Windows and its future (or lack thereof) in the mobile and tablet world, in the wearables world, is the only thing that matters to Microsoft. Hardware, Xbox, smartphones, Nokia business -- that stuff's all noise."

Regarding Xbox Music, Willard asked, "Could there be a less important catalyst to Microsoft?"

"Apple Music doesn't even matter to Apple and it might actually have some decent success," Willard concluded. "Nobody cares about Xbox Music and videos!"

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.