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Microsoft's 'Insider Plan' To Expand Enterprise Presence

May 05, 2020 11:32 AM ETMicrosoft Corporation (MSFT)24 Comments
Beulah Meriam K profile picture
Beulah Meriam K


  • Microsoft's turnaround over the past several years has better positioned it to take advantage of the enterprise market in a big way.
  • Certain key acquisitions of the past few years and the current agreement for GitHub to buy npm will further deepen Microsoft's presence in the enterprise segment.
  • Despite the market's nervous disposition during these uncertain times, Microsoft presents a compelling case for investment.

The market has been treating Microsoft (NASDAQ:MSFT) in an unusual manner considering its resilience against the current COVID-19 situation. After a sharp decline that saw the stock go from over $185 in the second half of February 2020 to under $135 within a month. The general sentiment around the company has been positive since then but, despite Microsoft reporting that "COVID-19 had minimal net impact on our revenue" and several firms raising their targets after earnings for Q3-2020, the periodic dips show that investor confidence has not yet been fully restored. The stock continues to trade under $175 as I write this piece and I think it's time for investors to understand the underlying upsides, not only from a post-coronavirus perspective but also through a better understanding of the company's long-term vision. MSFT is a clear buy at this price and I hope this article will justify that view.

Source: Seeking Alpha

The Whale in the Shallows

For a long time, Microsoft had been sitting on its laurels as the largest desktop OS and office productivity suite provider in the world. But when Windows 7 sales started to decline around 2011, it was a rude awakening for the Redmond, WA, company. PC shipments initially started to decline at a slow rate, gradually picking up momentum. It was time for the company to diversify, and the only way, or so it seemed at the time, was the jump into the mobile phone market with both feet.

Source: Statista

In a rush to catch up with Apple (AAPL) and Asian manufacturers, Microsoft bought Nokia. In 2010, Microsoft had also launched Windows Phone, and the Nokia acquisition should have given the company a leg up in the mobile market. However, by 2011, Apple and Samsung were already nearing the top of the smartphone market, threatening Nokia's market share position. The worst

This article was written by

Beulah Meriam K profile picture
I do deep-dive analyses into the top companies in multiple segments, including retail, consumer goods and technology.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (24)

Good Article!! Captures the essence of the MSFT Mission statement. Well done!
Trigalnorte profile picture
If had to choose one stock to own for the next ten years , that would be Microsoft. They have great products and the best CEO. I feel absolutely safe with this stock. I brought for the first time in my life at the big dip and last week bought even more.
So the actual reason MSFT has GitHub is because the folks running it believed in Nadella and that his attitude towards open source was genuine.
And GitHub had to be saved which required a lot of cash. There were only a few companies that could do it and the owners thought MS was the best choice. MS knew it would be a smart purchase in that it was better for them to own it than let it go bankrupt or fall apart under its own weight which is where GH was headed.
MS did not have a genius plan for GitHub when they rescued it. Smart ideas for making GH a profitable division took a while to develop.
The new GH is still fully independent now and will be moving ahead for years. My partner is moving to GH this summer when a still unannounced plan takes effect.
I don’t mean to be rude when I suggest the article is getting it wrong on that minor point. MSFT’s only motive at the time was to be a good steward of GH and show users/the world it wasn’t the bad old Microsoft that so many techies (me included) rightfully hated.
But I think the points of the article still stand and make sense. Good read.
Great work!
c0lbski profile picture
I still use windows millennium. Love msft and their products.
It appears to us that MSFT is now clearly the new 'carrot on the stick' for DOW leadership. And why not. They have absolutely no natural enemies other than mired competitors.
Thank you author for this most intelligent and comprehensive analysis of the leverage and value added that Microsoft has created for Enterprise, high end individual users, and long term shareholders. Definitely COVID here is a minor zit on the performance radar. And what a beautiful vehicle for the long term option investor. As well, it is the most readable yet comprehensive nutshell of MSFT in recent times.
Excellent analysis of MSFT history, product offerings and position amongst competitors. I enjoy your articles.
SirVirtual: What you've just said is one of the most insanely idiotic things

I have ever heard. At no point

in your rambling, incoherent response were you even close to anything

that could be considered a rational thought.

Everyone in this chat is now dumber

for having listened to it. I award you no points,

and may God have mercy on your soul.
Thanks CLANDO for saving us ! Keep in mind the upset probably is caused by failure to hold onto his MSFT.
Cloud will get additional leverage as 5G comes on-line.

As the author says, new mindsets from the pandemic also leads to tools offered by Microsoft.

So - my two takeaways from the article -

First, Microsoft continues to be well positioned for what's coming around the corner.
Second, Microsoft is lucky, and is run by some very smart people. The relation between luck and smart = chance favors the prepared mind. Microsoft is very well prepared. I see no appreciable downside risk, considerable upside potential.
paulsan profile picture
EXCELENT ARTICLE! Comprehensive view! THANKS!

I'd only add that from my point of view, the cloud infrastructure msft has already built and aggressively continue to develop, I mean the datacenter network covering the entire planet, is a very strong tangible asset. It is already an unbeatable competitive advantage, placing msft together with amzn and goog in a premium league in which is already too late for any other company to play.
SirVirtual profile picture
Ever since Satya Nadella became CEO of Microsoft, the quality and usability of the software has gone downhill. Because of MS market share in corporate environments, there was no choice but go to Windows 10, a spying and bulky piece of garbage operating system. It seems to be in beta forever as "new" editions continually are pushed and support for older versions disappear too quickly. This causes a huge amount of work and stress for IT departments. While I used to own MS stock, I do not any longer. As far as my current custom built PC, that I built, I will run Windows 7 until I have a firm grasp of Linux. MS is a company that is desperately in need of a better CEO and investors should beware.
What you've just said is one of the most insanely idiotic things

I have ever heard. At no point

in your rambling, incoherent response were you even close to anything

that could be considered a rational thought.

Everyone in this chat is now dumber

for having listened to it. I award you no points,

and may God have mercy on your soul.
I didn't buy into Microsoft for their OS, which is garbage now. I did buy because of their cloud and the future. Yes I still use Window's seven on my laptop but this piece of unstable Windows 8.1 is a joke. I'm learning about open source now. I never went to Windows 10 thanks to all the problems implementing it. Some say it has improved, I don't think so, not from where I sit.
Your criticisms of MSFT are so totally out of line with ANY reality on one of the very top, if not the top, tech stock in the entire industry. Your rant of falsehoods is not worthy of any responses.
fromthecouch profile picture
Great article. I for one would like to see more articles with this type of analysis on Seeking Alpha.
craftbrewinfo profile picture
MSFT is in the 180’s now and climbing !
Let it run 🏃🏻‍♀️ to $250 and split in December 👍👍
garkster profile picture
"But when Windows 10 sales started to decline around 2011...".

Windows 10 was released in July 2015. Perhaps you meant Windows 7 which was released in Oct. 2009?
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

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