Although for a few hours, at the beginning of the week Microsoft reached a market value higher than that of Apple, confirming the good performance of the shares and the choices of its CEO, Satya Nadella, to reorganize the company and its aims. In the following days, Apple and Microsoft competed for the supremacy of the largest capitalization, ending the day on the stock exchange on Thursday 29 November with 852.04 billion and 845.84 billion dollars, respectively. Beyond overtaking and counter-overtaking in the short term, the good performance of Microsoft's shares in the last year effectively tells the results achieved by a company that until a few years ago seemed disoriented and unable to reinvent itself.
Short term
As an analysis by Steve Lohr in the New York Times explains, Microsoft's successes can be explained in the short and medium term. In the immediate future, the company's shares have held up much better than those of other large tech companies, in recent weeks struggling with a decline in investor confidence, who are demonstrating a more pronounced tendency than usual to sell the shares of the company. US technology sector. In the case of Apple, the distrust derives from the less optimistic forecasts on the sales of the new iPhones, presented a couple of months ago, very expensive and struggling to undermine the old models in the preferences of users. The vast majority of Apple's revenues go through the sales of iPhones: if these fall, the turnover of the company is necessarily reduced, which does not sell other products with a success comparable to that of its smartphones. While Apple is very sound economically, the prospect of seeing it grow less than expected worries investors, who diversify their holdings more on the stock market by reducing investments in the company.
Also in the short term, Microsoft is making a name for itself in the technology stocks market for engaging in more secure and less controversial services than some of the big companies in the industry. Facebook and partly Google, along with YouTube, are periodically accused of favoring the spread of fake news, of not having done enough to counter Russian interference in the 2016 US presidential election and of not protecting the privacy of their users. The possibility of governments intervening with stricter laws to regulate their activities worries investors, who have therefore become much more cautious in moving large amounts of money on the stock exchange to these companies.
Cloud and services
But the reason for Microsoft's success on the stock exchange, with the value of its shares growing by 30 percent in one year, is to be found in the industrial choices of the company in the medium to long term. In a few years Microsoft has abandoned the smartphone sector, where it had received many disappointments, and has concentrated on providing systems and services for companies, a much more solid and less unpredictable sector than that of mobile phones. Doing so was not easy, but 4 years ago Nadella had already hinted that she had clear ideas for Microsoft, shortly after taking over as director of the company in place of Steve Ballmer.
Microsoft was lagging behind in cloud computing (i.e. providing services and space to store and share files remotely, in data centers) than its competitors. The first full service of this type was introduced by Microsoft in 2010, about four years after that of Amazon, but it would have had to wait until 2013 to have a comparable system in terms of services and performance. Microsoft's cloud remained for several years a secondary product, compared to the historically most relevant one of the Microsoft operating system and its various forms, including that for smartphones strongly desired by Ballmer in a desperate attempt to compete with iPhones and Android smartphones. .
As soon as she was appointed CEO, Nadella found a very complicated situation in the company, with numerous sectors to reorganize, some poorly managed and others that did not know where to go. After evaluating the situation, he concluded that Microsoft's main goal was to go back to the roots and invest heavily in services for companies, in order to compete with Amazon on equal terms. That choice turned out to be a winner: in just over three years, Microsoft nearly doubled its market share in the cloud sector, to 13 percent. Amazon is still firmly in first place with 33 percent, but Microsoft continues to expand its presence and generate large revenues.
In the fiscal year that ended last June, Microsoft recorded a 15 percent increase in revenues, reaching an overall result of $ 110 billion. Corporate operating income (i.e. before tax and other financial charges) was $ 35 billion, 13 percent more than a year earlier.
In recent years, Microsoft has strengthened its presence in cloud technologies by making a large part of its services converge towards online. Office, its popular productivity software suite, has been completely transformed into a version that can work online and through a regular browser, simplifying file management and sharing. The system is also integrated into other Microsoft services, such as Skype for real-time communication and Outlook / Live to manage your e-mail.
Acquisitions
The acquisitions that Nadella has chosen to make in recent years had the same orientation towards professionals and services for companies. In 2016, Microsoft acquired LinkedIn for $ 26.2 billion. The social network to manage one's work relationships, or find a new job, continues to have good success and is a good opportunity for Microsoft to make its products known. This year Microsoft also acquired GitHub, the most used and famous platform used by software developers to share code, ideas and experiences on building applications. It is used by approximately 28 million programmers and gives Microsoft the ability to facilitate better integration of external programs into its services.
The Nokia parenthesis
Nadella has also made some painful, but necessary, decisions to reorganize Microsoft's operations. In 2013, under the pressure of then CEO Steve Ballmer, the company had acquired Nokia, the historic mobile phone company, confident that it could become the piece that Microsoft had always lacked to compete with Apple and Google in the smartphone sector. . The acquisition did not bring the expected results and just two years later, Nadella decided to get rid of Nokia, losing 7.6 billion dollars. A cut necessary to reorient the company that a few years later we can say has worked, perhaps better than expected.
