Microsoft teams up with ABB to create 'one of world's largest industrial cloud platforms'

Microsoft announced Tuesday it was expanding its strategic partnership with ABB, just as the Swiss engineering firm was rebuffing investor calls to split up its business.

It was a busy day in Zurich for ABB, with a slew of headlines from the multinational corporation which operates in robotics, and power and automation technologies. The strategic partnership with Microsoft will allow its customers to access the U.S. tech giant's cloud technology.

ABB's already has 70 million connected devices installed and more than 70,000 digital control systems, and with Microsoft it aims to "develop one of the world's largest industrial cloud platforms."



"Together with ABB, we are providing industrial customers with the digital technology and cloud platform to empower every person, team and business system within an organization to glean new insights and drive faster decision making to seize new growth and opportunities," said Satya Nadella, CEO of Microsoft, in a press release on Tuesday morning.

But the announcements didn't stop there. ABB said it would step up cost savings and launch a new share buyback program. It also stated it would keep its power grids division, despite grumblings from activist investors.

Ulrich Spiesshofer, CEO of ABB, told CNBC Tuesday it would keep the unit as the board decided it was the best option to create value for shareholders. Accusations center on the low profitability of the power grid unit but Spiesshofer was quick to highlight that it was still a profit leader in the industry.

"We have listened to all the expressed views, very, very carefully. We have listened to our customers. We have listened to the market. We have worked out a great transformation program to create a substantial value creation story for our shareholders going forward," he said.

International investment firm Cevian Capital, which has 10 billion euros ($11.2 billion) in assets under management on Tuesday expressed regret at ABB's decision not separate and reduce the complexity of the conglomerate.

"ABB is a collection of top-quality businesses whose performance has been hindered for many years by the company's conglomerate structure. The potential is 35 Swiss francs ($35.7) per share in today's terms" Lars Förberg, a managing partner and co-founder of Cevian Capital, said in a statement.

"The board has decided to keep the conglomerate structure. We think this is an unfortunate decision. The board and management team will be held accountable for realizing 35 Swiss francs. The time horizon is now. ABB has under delivered during a long time period. Therefore, we are already in 'the long term'," he added.