Fri, May 22, 1:19 PM
- CNBC's David Faber reports Microsoft (MSFT -0.7%) held "significant talks" earlier this spring about acquiring Salesforce (CRM +2.4%), but the companies "remained far apart on a price." Microsoft was reportedly willing to offer $55B for Salesforce (current market cap of $49.3B); Salesforce CEO Marc Benioff is said to have wanted as much as $70B.
- Faber adds the talks aren't expected to restart anytime soon. Aside from the price difference, Satya Nadella was reportedly "somewhat reluctant to pull the trigger on a deal of such size and consequence for his company."
- Bloomberg reported on May 5 Microsoft is "evaluating a bid" for the cloud CRM software giant - Microsoft's name had already loomed large in speculation about a rumored suitor. Reuters reported soon afterwards Microsoft wasn't currently weighing an offer.
- Salesforce has spiked higher on the report. Shares are up 6.3% since the company posted an FQ1 beat and reported 31% Y/Y deferred revenue growth on Wednesday afternoon.
Tue, May 19, 12:11 PM
- FBR's Chris Rolland, after talking with Intel (INTC -1.2%) IR chief Gary Willihganz: "While excess PC inventory dynamics were well known exiting 2014, we believe many investors did not expect additional PC inventory drain into the Win10 release. Intel was careful to explain these nuanced inventory dynamics, which we believe may have also been a contributor to the weaker-than-expected ODM shipments witnessed in April."
- Rolland adds that while Intel "expects inventory replenishment in 2H15 around the Win10 release, it was careful to temper expectations for a surged uptick in demand." A Q1 CC remark from AMD CEO Lisa Su suggested Windows 10 (NASDAQ:MSFT), whose Start menu and enterprise-friendly features could help boost industry demand, will launch in late July.
- Also: Morgan Stanley says it's cautious on PC names in the near-term (moreso on chipmakers than other firms) given soft Q2 PC/hard drive inventory builds and weak April sales from ODMs. It sees normal seasonal growth following a rough Q1, and doesn't expect a recovery occurring before Q3.
- Micron (MU -2.1%), Seagate (STX -3.3%), and Western Digital (WDC -1.5%) are lower on a day the Nasdaq is near breakeven. Micron, which is close to its 52-week low, fell on Friday after Nomura cut estimates on PC DRAM pricing fears. Microsoft is down 0.7% after factoring its dividend payment (shares are trading ex-dividend today).
Tue, May 5, 3:08 PM
- Bloomberg reports Microsoft (MSFT -1.2%) is "evaluating a bid" for Salesforce (CRM +4.8%) after Salesforce was approached by another potential suitor. Salesforce is reportedly working with two banks to determine a response.
- Bloomberg cautions Microsoft isn't currently in talks with the cloud CRM software giant, whose market cap stands at $49B. There was plenty of speculation Microsoft was the company that (per Bloomberg) recently approached Salesforce. SAP has denied being interested, and Oracle has suggested it isn't. A source says Microsoft has "long expected it might compete for Salesforce if it was for sale."
- Salesforce has jumped on the report. If Microsoft pursues a bid, activist ValueAct Capital (has a board seat) might raise objections.
- The report comes as Microsoft announces a partnership with cloud ERP/HR/e-commerce software vendor NetSuite (N +3%) to integrate NetSuite's apps with Office 365 apps and Azure services, and to make Azure NetSuite's "preferred cloud infrastructure platform." Microsoft struck an Office 365-focused partnership with Salesforce last year. NetSuite has received a lift from Bloomberg's report.
Fri, Apr. 24, 2:32 PM
- "By calendar 2016, we believe organic [constant currency] growth returns to low single digits with growing cloud business and earnings growth can potentially be restored to 10% or so with the leverage of share repurchase, and continued strong cash flow generation," writes Nomura's Rick Sherlund, upgrading Microsoft (NASDAQ:MSFT) to Buy following its FQ3 beat. His target remains at $50.
- Sherlund, who downgraded in January on account of Microsoft's FQ2 numbers, still thinks the company will be in a transition period for a few quarters, and notes certain core businesses (e.g. Windows, traditional Office licenses) were soft. However, he thinks total Office revenue (traditional + 365) could start rising again in 2016 "given high interest and migrations among business users to Office 365 and new cross platform productivity tools for Windows, iOS and Android."
- "In our view, Microsoft is well ahead of its large cap value peer group in the transition to the cloud," says UBS' Brent Thill (Buy, $50 target). Pac Crest's Brendan Barnicle (Outperform, $50 target) observes Office 365 still covers less than 10% of the Office installed base, leaving plenty of room for growth. He estimates Azure is on a $1.5B/year revenue rate (compares with $5.16B in trailing revenue for AWS and a $6.3B/year run rate for Microsoft's broader commercial cloud ops).
- On the CC (transcript), CFO Amy Hood stated Microsoft's FY15 (ends in June) opex guidance ($32.4B-$32.5B) is now $2B lower than where it initially was. Adjusting for forex and the Nokia deal, opex rose just 1% Y/Y in FQ3 thanks to job cuts. Meanwhile, Satya Nadella mentioned Office iOS/Android app downloads have topped 100M.
- Prior Microsoft earnings coverage
Fri, Apr. 24, 9:17 AM
Thu, Apr. 23, 6:57 PM
- Continuing its habit of guiding cautiously, Microsoft (NASDAQ:MSFT) has guided (.ppt) on its FQ3 CC for its various business units to have FQ4 revenue of $21.6B-$22.3B, below a $22.7B consensus. Corporate/other revenue (-$20M in FQ3, $314M in FQ2) isn't included in the forecast.
- Forex is expected to have a 4% impact on FQ4 revenue growth, up from 3% in FQ3. The unearned revenue balance ($20.2B at the end of FQ3, +4% Y/Y) is expected to rise Q/Q, in-line with seasonality save for forex.
- In its earnings slides (.ppt), Microsoft notes Office consumer revenue fell 41% Y/Y. 27% of the decline is attributed to the transition to Office 365 subscriptions from up-front licenses, and the rest to weak Japanese sales (they were strong a year ago ahead of a tax hike). "Windows Phone" revenue (includes Android royalties) fell 19% thanks to a mix shift towards low-royalty phones.
- Xbox platform revenue fell 24% due to lower Xbox One sales and a mix shift towards cheaper models. Lumia phone sales (8.6M) were up 18% Y/Y; 24.7M non-Lumia phones were sold (down Y/Y).
- Premium versions of Windows Server, System Center, and SQL Server were a strong point: Their collective sales rose 25% ahead of the July end of Windows Server 2003 support. Microsoft also reports Azure compute usage more than doubled (Azure revenue isn't broken out), and that enterprise mobility (EMM) customers rose over 70% to more than 13K; Microsoft launched an EMM suite last May.
- Microsoft is now at $45.10 AH. FQ3 results, details, PR.
Thu, Apr. 23, 4:11 PM
Mon, Apr. 20, 1:55 PM
- "With the Windows 10 launch at the end of July, we are watching sort of the impact of that on the back-to-school season, and expect that it might have a bit of a delay to the normal back-to-school season inventory build-up," said AMD CEO Lisa Su during last Thursday's earnings CC (transcript).
- To date, Microsoft (NASDAQ:MSFT) has only said Windows 10 (currently in the technical preview stage) will launch at some point this summer. AMD is among the Microsoft partners likely to be given advance notice about the software giant's launch plans.
- A late-July launch would make the OS available in time for the back-to-school season, and would be well-received by a PC industry that just had a very rough Q1 caused in large part by soft enterprise and desktop demand. Windows 10 contains a bevy of enterprise-friendly features meant to win over businesses that shunned Windows 8. It will also be available as a free upgrade for users of both legitimate and pirated Windows copies, though the latter will still be viewed as unlicensed.
- Separately, Microsoft has launched Azure Service Fabric, a framework that helps developers scale and customize Azure-based services more easily. The solution relies on breaking complex apps into "microservices" that can be jointly managed and automated, and programmed via Visual Studio. It follows the March launch of Azure App Service, a cross-platform Web/mobile app development service.
- Microsoft is up strongly amid a 1.2% gain for the Nasdaq. Earnings arrive on Thursday.
Thu, Mar. 12, 9:17 AM
- Intel (NASDAQ:INTC) now expects Q1 revenue of $12.5B-$13.1B, below prior guidance of $13.2B-$14.2B and a $13.7B consensus. Gross margin guidance remains at 60% (+/- 2%), with lower volumes offset by higher ASPs.
- "All other expectations" have been withdrawn - that presumably includes full-year guidance for mid-single digit revenue growth. Guidance will be updated during Intel's April 14 Q1 report.
- The chip giant blames the warning on "weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain." In particular, it thinks "lower than expected Windows XP* refresh in small and medium business and increasingly challenging macroeconomic and currency conditions, particularly in Europe," are taking a toll on sales. Server CPU division sales are "meeting expectations."
- Other PC-exposed names are following Intel lower: Microsoft (NASDAQ:MSFT) -2.4% premarket, AMD -2.8%, Nvidia (NASDAQ:NVDA) -2.5%, HP (NYSE:HPQ) -2.3%, Seagate (NASDAQ:STX) -2.5%, Western Digital (NASDAQ:WDC) -2.7%, Micron (NASDAQ:MU) -3.6%.
- Update (11:35AM ET): While Intel is still down over 4%, Micron and Seagate have turned positive, and HP is close to breakeven. Microsoft, Nvidia, and Western Digital have pared their losses, but remain lower.
Wed, Mar. 4, 1:58 PM
- A day after slumping to new post-IPO lows and coming within $0.03 of $80, Alibaba (NYSE:BABA) has seen dip-buyers emerge in large numbers. Naturally, Yahoo (NASDAQ:YHOO) is along for the ride.
- The gains come as a Chinese publication reports Jack Ma once said he considered acquiring Yahoo, which plans to spin off its Alibaba stake into a publicly-traded company in Q4. Ma's alleged comments: "The acquisition of Yahoo is something I worked [on] a couple of years ago, this is a political problem, not an economic problem, Yahoo is a media [company], more sensitive."
- There has already been speculation Alibaba will try to buy Yahoo's spinoff (much less politically challenging than buying the whole of Yahoo) at some point. Bloomberg's Matt Levine has noted the spinoff will have to wait a year before a deal occurs, in order to maintain its tax-free status.
- Meanwhile, Alibaba's Aliyun cloud services unit (a giant in the Chinese cloud infrastructure market) has opened a Silicon Valley data center, its first in the U.S. For now, the data center will cater to Chinese companies with U.S. operations, but it plans to go after non-Chinese clients later this year. When it does, Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), and a slew of other incumbents will be waiting.
Wed, Feb. 18, 12:15 PM
- Down AH yesterday due to the light sales guidance provided with its mixed Q4 results, Rackspace (RAX +1.4%) is now back above $50. Helping its cause: Pac Crest has upgraded to Outperform, and at least four firms have hiked their targets.
- Pac Crest cites enterprise and OpenStack momentum as reasons for upgrading: "In the second half of 2014, Rackspace won more large enterprise contracts worth at least $100,000 per month than it had in the prior five quarters combined ... management indicated that OpenStack now makes up more than 50% of its public cloud revenue, which implies OpenStack revenue is at least 15.6% of its total revenue."
- Cowen (target hiked to $75) now considers it likely Rackspace "will announce support for a mega cloud provider in 1H15," thereby boosting its long-term addressable market and lowering future capex needs (in exchange for sharing revenue). It adds sales guidance was in-line after adjusting for forex, and that EBITDA margin guidance was better than expected.
- Meanwhile, new CEO Taylor Rhodes argues the cloud infrastructure (IaaS) market's price war is calming down. "Amazon Web Services (NASDAQ:AMZN) in November, for the first time, didn’t make a price cut move ... AWS is feeling like they are the reference brand leader, that they are strong versus Google (NASDAQ:GOOG), so they don’t need to do it as much. Microsoft (NASDAQ:MSFT) is cutting price, but who knows how much share they are actually taking."
- He also reiterates Rackspace's assertion that its OpenStack/hybrid cloud offerings are differentiated in the battle for enterprise accounts. "The mainstream market has two problems: They have legacy apps that won’t go [to multi-tenant public clouds] automatically ... the second problem they have is this skills set gap ... There is a need for software and tools development."
- Q4 results, guidance/details
Tue, Feb. 17, 10:30 AM
- 7 of the 8 firms launching coverage on Box (BOX -2.6%) following the end of its underwriter quiet period have provided neutral writing, generally citing valuation as their reason for doing so.
- Though launching coverage at Neutral due to the company's multiples, JPMorgan praises "Box's differentiated focus on rich and complex features for corporate IT departments, spanning security, compliance, workflow and auditing."
- Morgan Stanley (Equal-Weight) predicts "a growing enterprise ecosystem will offset competitive pressures over time," but also considers a current enterprise value of 7x 2016E sales fair in light of "near-term limits on growth and margins."
- Credit Suisse (Outperform) is the sole firm to give Box a bullish rating, arguing the company offer a better enterprise file-syncing/sharing platform than top rival Microsoft, and that it "has sufficient lead time to further improve its competitive position and expand its user base."
- Speaking of Microsoft (NASDAQ:MSFT), Box has announced it's joining Citrix and Salesforce as initial members of the software giant's Cloud Storage Partner Program. The deal allows Box's services to be integrated with the Office iOS apps, and more deeply connected to Office Online. Box/Office 365 integration already exists, as does a partnership between Microsoft and Dropbox.
- Previously: Box CEO makes long-term case
Wed, Feb. 4, 2:53 PM
- TechCrunch reports Microsoft (MSFT +0.9%) has acquired Sunrise, a developer of mobile (iOS/Android) and cloud-based calendar apps, for a price of "at least $100 million."
- Sunrise's apps respectively have ratings of 4.5/5 and 4.3/5 stars on the App Store and Google Play; Google Play reports seeing 500K-1M installs. The apps sync/integrate with Microsoft Exchange, Google Calendar, Eventbrite, and iCloud. TechCrunch reports hearing the apps will remain available on a standalone basis.
- The report comes two months after Microsoft, which has done much to boost its cross-platform credentials in the Satya Nadella era, bought iOS/Android e-mail app developer Acompli for a reported $200M+. Acompli's app underpins new Outlook mobile apps launched by the software giant.
- Two weeks ago: Microsoft shows off HoloLens, new browser, universal apps
Tue, Jan. 27, 12:40 PM
Tue, Jan. 27, 9:22 AM
- After selling off yesterday in response to Seagate's guidance, Intel (NASDAQ:INTC) and HP (NYSE:HPQ) are showing steep losses in premarket trading today after Microsoft (NASDAQ:MSFT) reported 13% Y/Y drops in both its Windows OEM Pro and non-Pro revenue, and offered conservative guidance. Microsoft is down 8.3%, and Nasdaq 100 futures are off 1.4%.
- Microsoft blamed the Windows OEM Pro decline on slowing business PC demand (following a boost driven by the end of Win. XP support), an unfavorable mix, and academic discounts. The OEM non-Pro decline was blamed on a mix shift towards cheaper hardware for which the software giant has cut or eliminated Windows licensing fees.
- Microsoft's server/data center-related sales were healthier: Server product/services revenue rose 9%, and commercial cloud revenue (Office 365/Azure) grew 114%. But on the CC (transcript), the company stated transactional server revenue "was down primarily due to a declining traditional server market." A shift in demand towards Web/cloud data centers often relying on Linux servers might also be a factor here.
Tue, Jan. 27, 9:10 AM
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Microsoft Corp is engaged in designing, manufacturing, selling devices, and online advertising to a global customer audience. Its products include operating systems for computing devices, servers, phones, and other intelligent devices.
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