Research archive for MSFT

The software giant Microsoft released its September quarter earnings which were better than analyst expectations but revenue guidance was slightly lower than expected. One of the biggest contributors to Microsoft's earnings was their cloud business Azure which the company said continued to see strength as world leading companies chose Azure to build their digital capabilities.

So LinkedIn is going to fall into the mitts of Microsoft. Not so much fall as shareholders of the largest self promotion business connection platform need to accept the offer of all cash at 196 Dollars a LinkedIn share. How big is this for Microsoft? At their (Microsoft) closing price of 50.14 Dollars last evening, the market capitalisation of the creator of the "Office" products was 393 billion Dollars. 26.2 billion Dollars in total. That is 6.67 percent of the Microsoft market capitalisation. Even with the 50 percent premium that they offered. I suspect that Microsoft are looking for a greater web integration into their office suite. If you think about it, and Paul often says it, the spreadsheet, email clients and editing tools such as Word have boosted productivity immeasurably. The world has changed for the better.

Microsoft announced their new CEO yesterday, an insider who has been there and lived through all the major operating systems and office releases over the years. Satya Nadella is his name and whilst he did a post graduate degree in the US, he is definitely an Indian from India. Born, schooled and even went to university there, before moving to the US to pursue his studies further. Nadella is only 46, but apart from age, the division that he ran and the direction of Microsoft from here are no doubt going to be much topic of discussion.

What the .....? Well, it was something that I suppose we were expecting all along, in the wee hours of the morning here it was announced that Microsoft would be buying most of Nokia's cell phone business. Stephen Elop, an Microsoft guy who went to run Nokia, is now seen as the replacement for Steve Ballmer, who announced his retirement days ago. All good I guess for Microsoft shareholders, the companies suggested that they had been working on this deal for a while now.

Earnings out of the US on balance were decent, there was a wide miss from Microsoft who reported in the aftermarket Thursday, the stock down 11.4 percent in normal trade Friday. I guess that even though the extent of the Surface RT (the tablet business) write off of 900 million Dollars, only seven cents a share, the fact is that they are not making as much progress as they want to. Or need to, for their shareholders. The fact is, the PC business is struggling, we are running at a quarterly PC sales run rate of 76 million. Two years ago, that peaked in Q3 2011 at 96 million a quarter. You can see exactly why Microsoft are struggling here, in a changing world of consumer behaviour. And amazingly as it may sound, Microsoft actually coined the phrase "Microsoft Tablet PC". It was made over a decade ago, but never quite took off.

Microsoft have two pieces of news this morning, or overnight should I say. Steve Sinofsky, the driver of Windows for Microsoft no longer works there. Parted ways. Fired. Left. All of the above. It says a mutual decision from this NY Times blog: The Leader of Windows Exits Microsoft. What does that tell you about the current Windows 8 release? That is the bad news.

Microsoft now trades on 11 times earnings, whilst the all time high (adjusted for the split last in Feb 2003) was nearly 59 Dollars at the end of December 1999. And the annual earnings per share back then was 1.42 USD, or net income of 7.785 billion Dollars on 19.7 billion Dollars worth of revenue. That was in 1999 when businesses were spending like gang busters, just two years prior to that in 1997, the business had made 3.454 billion Dollars off only 11.936 billion Dollars worth of annual sales. Just last evening the Microsoft revenue for the past quarter clocked 18.059 billion Dollars. The quarterly revenue was nearly more than the entire 1999. And more than double for the quarter past, than for the whole of 1996, where net revenues were 8.671 billion Dollars for the full year. And if you needed to know, last evening the company reported that they have 63 billion Dollars worth of cash on their balance sheet. Cash on hand for Microsoft in 1995 was less than 5 billion Dollars.

This raised more than just a few eyebrows, Microsoft announced last evening that they would be acquiring Yammer for 1.2 billion Dollars. Yammer has nothing to do with Usain Bolt and his ability to smoke the opposition over 100 metres, but rather a plug in piece of software that was supposed to improve productivity. That probably really does that. What is Yammer? Well, we used it once here and then promptly uninstalled it, for the only reason that Yammer is actually for bigger organisations with multiple users. It is basically a closed network of users who can interact with each other on chat, replacing memos, but has file sharing abilities as well. So, if I remember right, the software runs on your desktop, and integrates your calendar, tasks and all those clever things that Microsoft has achieved in their software over the years. But, 1.2 billion Dollars? I worked it out, it is a mere 14 and a bit days of Microsoft's EBITDA. Two weeks. That is it. And, if you forgot, Microsoft has a war chest of around 60 billion Dollars, in the bigger picture this is not a giant leap. So, expect the next patch in your new Windows operating system soon.

Do we even want to talk about the Microsoft Surface tablet? I guess we should and we must, the "Surface" was unveiled by CEO Steve Ballmer. The device weighs slightly more than the current iPad (the new iPad) but has a bigger screen, 10.6 inches compared to the iPad 9.7 inch screen. The pricing will be similar to that of other options out there, and by that I suspect that Ballmer means the Samsung Galaxy and the Apple iPad. What is quite cool is that there is a magnetic cover that doubles up as a fold down keyboard. And it can connect with printers, and it has a USB port. But, the expensive part will be that it runs a version of Microsoft 8 and office, so that licence part will have to be paid for by the user, which could mean that it might be more expensive that an iPad. As the WSJ points out though, if this is meant to replace the PC at home, then how do the manufacturers of PC's feel about this hardware muscling by Microsoft? Not too sure how they feel, but my thinking is that they do not feel altogether excited by this, HP, Dell and the like. I guess the good news for Intel is that their chips will be used in these products.

Microsoft. Strangely you would think that this company is old tech, even though Mr. Nerdy (my daughters call me that!) Bill Gates only founded this company nearly 37 years ago. I remember doing some very low key basic programming and visual basic, let me say I was pretty bad at it, but interested. Not interested enough clearly. I was watching a Bloomberg round up of second quarter sales, and for the first time sales in Windows products fell, with devices (read Xbox and Kinect) and servers (enterprise) leading the charge with double digit sales.

But tech stocks were the focus afterhours, results from Microsoft. Which I thought looked very good, considering that people have been talking about a struggling PC business. I remember seeing an interview with Michael Dell from err.... Dell Inc. last week who suggested that personal computers were not where it was at for him and his company. And that personal computers were less than ten percent of all of the hardware market, which tops three trillion Dollars worth of annual sales.

Mister Softee, also known as Microsoft unveiled Windows 8 last evening. Don't take my analysis of it, rather have a look at the folks who have actually had the device with the operating system in their hands. Check it out ---> Previewing The Future: Hands On With Windows 8. That is from the fellows over at Tech Crunch, this is another good view from PC World: Windows 8 Also Has Tools for Power Users. My sense is that it is a good product. But there are questions as there were when the iPad was first released. I suspect that ultimately it is all about the applications that are available to the users, to customize their tablets for their specific use. Microsoft have a kind of patchy record letting people into the circle. My two cents worth, I hope it works for them and their shareholders.

Microsoft came out with their fourth quarterly results yesterday which looked impressive but showed a shift in the business somewhat which I guess was expected. They managed to grow profits by 30% with quarterly net income coming in at $5.9bn. Revenue rose 8% from last year to $17.37bn. Where these revenues came from is what interested me and how each sector in this company acts as a proxy for the general market in some aspect because it is such a big and dominant player.

Microsoft was the key story on the day really, acquiring Skype in the biggest deal in their history. Is this a good idea? Perhaps. Time will tell, but Skype has been owned by multiple parties, including the fellows from eBay, who this is a positive for. 8.5 billion Dollars for a free calling service, I suspect that this might have a lot to do with the Windows Phone. Skype is going to be the platform and you will use your data connection to call. Yip, it has everything to do with that, don't be confused for a second. But could it ever be a completely paid for thing? I wouldn't pay even a small rate to call via my computer. I wonder how it is going to work?

Also making news, Microsoft afterhours with numbers. And as expected, Windows dominance is starting to get eaten up by the Tablet market, in particular the iPad, which of course has a completely different OS to the normal run of the mill PC user. Not an awful decline, but a decline nevertheless in the PC space. Business of course will continue to invest in new hardware with Microsoft software, so I guess until Apple enter that space (probably not for a long time), then the likes of SAP, Oracle and Microsoft will continue to dominate over there. Afterhours the stock is currently trading down one and a half percent.