Tag Archives: Satya Nadella

From $4 to $20 billion in three years

Microsoft is a great company, and CEO Satya Nadella is doing something right. Last year he said that Microsoft will try to reach $20 billion in revenue for its cloud business serices in 2017. Their cloud business is Office 365 commercial, Azure, Dynamics Online and other cloud properties.

The company had $4 billion in revenue from its cloud business in Q4 2014, and reached $12 billion in the past quarter. The arrow goes straight up and their new goal is for fiscal year 2018 (July 2017 – June 2018).

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It seems like investors are impressed. They like what they see, and its shares jumped more than five percent after their earning report earlier this week. Microsoft is not so hot and trendy for investors anymore, but the tech giant is still running a great business.

We have seen a shift from mobile to cloud, and Microsoft is still innovative and thats why they are among the biggest companies in the world. Market cap is over $400 billion, and they are still growing. Thats impressive.

In their fourth quarter of the companys fiscal 2016, revenue from Microsoft Azure grew 102% YoY. Azures usage more than doubled in only one year.

Microsoft beat expectations, posting an adjusted profit of $5,5 billion on $22,6 billion in revenue. Their strategy on Windows 10 is a huge success and so are Office 365. The company is still among the biggest companies in the world.

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Microsoft are near its peak in 1999

Microsoft is well-known for its operating systems and what its founder Bill Gates have done for the company from the early beginning, but that part of the company is not the best performing part anymore.

We all know that the PC business in declining as demand continues to wane. But Microsoft`s stock has increased. The stock peaked in 1999, and have never yet recovered. Until now. The stock is trading near its 1999 level.

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The focus has shifted from PC sales to its growing cloud business. Just like Google and Amazon, Microsoft are among the few leaders in the cloud business. Their cloud business includes Office 365, Dynamics CRM and Azure, and they all reported gains of over 5 percent last quarter.

Microsoft will report after the close on Thursday 19, and its expected to hear that CEO Satya Nadella will talk about their latest acquisition; LinkedIn. Whats interesting is to hear how they are planning to integrate LinkedIn into their core business, because investors are a little bit confused about the valuation of the company after the acquisition.

Other things to look for is how Microsoft`s business will be hit by Brexit, because about 7 percent of their business comes from UK alone. On top of that there is a strong dollar, so this is something that will have an impact to the bottom line for Microsoft.

The Estimize consensus is calling for earnings per share of 55 cents on $13,56 billion in revenue, which is 2 cents higher that Wall Street on the bottom line and nearly in-line on the top. Compared to a year earlier, this represents a 2 percent decline in earnings while sales could grow by 3 percent.

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Microsoft & Minecraft

All the kids around me are sitting in front of their computers and playing games, and I don`t know what`s so funny with the game. I asked them yesterday, because you can`t win something and you are not competing with someone. So, why is it so funny?

The kids love the game and they play Minecraft. A free-to-build sandbox game, which is developed by the Swedish independent video game developer Mojang AB. The company is founded in May 2009 by Markus Persson in Stockholm.

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Markus Persson founded Mojang alongside his best friend Jakob Persèr, with Carl Manneh later brought in as a CEO. Whithin a year, the company grew to a size of twelve employees. In 2011, the founder of Napster and former Facebook president Sean Parker offered to invest in Mojang, but was declined. A year later, Mojang had accumulated revenues of over $80 million.

On September 15, 2014, Microsoft announced a deal to acquire Mojang for $2,5 billion in a deal to be made official by the end of the year. With the stakes in the company bought out, the three founders will leave the company.

Is that a problem?

Probably, because in my point of view, the «assets» is gone. I`m in doubt about Microsoft’s skills to take Minecraft to the next level. Do they have the right expertise to do that? I hope so, because if Microsoft do the right things, I think Mincraft can be the new virtual kind of the popular Danish plastic-bric-company; LEGO.

The private company LEGO is valued at $14,7 billion and they have great success. You can only imagine how the opportunities are for Microsoft? Really big I think. Minecraft has sold over 54 million copies across all platforms.

Microsoft’s new CEO Satya Nadella has made his first major acquisition since taking over the leadership after Steve Ballmer. Microsoft has been known to make some expensive acquisitions under Steve Ballmer, and many companies were later sold at a loss or absorbed into the company without unlocking new value.

I think Microsoft can boost sales of both Xbox and Minecraft. Microsoft will create new editions of the game and set up a film and merchandising franchise, but I see a little bit trouble in the long run because of the lack of the founder Persson.

Minecraft has been around for over four years now, and longevity and consistency in this business isn`t normally part of the equation. Games tend to be trendy, but Minecraft seems to be one of the few exceptions to this rule, and that`s probably why Microsoft see the potential in this game.

Back to our Danish friends in LEGO. Think about it. LEGO is still hot for the kids, and have been on the market since 1932! Can you belive that? A family-owned company based in Billund, Denmark, which is the world`s largest toy manufacturer, surpassing Mattel, previously holding that position.

The word LEGO is derived from the Danish words «leg godt», meaning «play well». The word «lego» also means «I gather together» in Latin, and «I connect» or «I tie» in Italian. LEGO`s revenue in 2013 was $4,7 billion, while Mojang generated only $326 million the same year. That`s nothing compared to Microsoft’s $23 billion in the last quarter, so it would do little to move Microsoft’s share price, adding about $75 million a quarter to the top line and about $30 million to the bottom line.

But look at the iconic brand; LEGO. They have more than plastic lego bricks. They have grown to include factories throughout the world and have 11,755 employees (2013). In addition, they have built four amusement parks around the world, known as «Legoland».

Each park features large-scale Lego models of famous landmarks and miniature Lego models of famous cities. Legoland was first built in Lego`s home town Billund in Denmark. This was followed by Legoland Windsor in England, Legoland California in Carlsbad, US and Legoland Deutschland in Gunzburg, Gemany.

In addition, they opened Legoland in Winter Haven in Florida, and Nusajaya, Johor, Malaysia. Now, they are planning to open a new Lego hotel in Asia. Merlin Entertainment is also planning to open several parks in Legoland Dubailand, Legoland Nagoya, and Legoland Korea. They have also opened four new Legoland Discovery Centres, which take the Legoland concept and scale it down to suit a retail park environment.

You can imagine what opportunities Microsoft have with this game, but do they have the culture to expand the brand?

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

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