By: Mark Sloan
In this short video, Mark Sloan, Director - Senior Global Equity Analyst, discusses how Microsoft remains at the forefront of digital transformation in the technology space.
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Microsoft is positioned at the Forefront of
the digital transformation happening across multiple Industries.
It is involved in Designing Technology Solutions.
That boost productivity and also perceived
by Chief technology officers as an indispensable it
Mega vendor and true partner.
It also enjoys a very diverse technology
stack and portfolio of business drivers Azure
office teams LinkedIn
gaming security.
And probably metaverse going forwards this
shift of corporate workloads to the cloud has been
driving especially strong growth from Microsoft's commercial Cloud
businesses, including Azure and Office 365 We
Believe Microsoft strategic Competitive Edge
centers on its unrivaled customer engagement already
embedded in many Enterprises globally via
office and windows. It is in a
strong position to upsell it's Cloud solutions to
Legacy on premise clients whose software
and data remains installed locally.
Satya Nadella
is in our opinion a world-class CEO.
Who has been keyed to driving Microsoft's transformation since
his appointment in 2014 under his
leadership. The overall corporate Mantra has shifted
from a focus on devices and services and windows
first to Cloud first and an
embracing of Enterprises and developers. The
result has been a reinvigorated growth
profile and a higher mix of annuity revenues.
CFO Amy hood has also controlled costs
very well.
Meaning that over the past four years return on invested Capital
has more than doubled.
Whilst cognizant of risks we would concur with
CEO satyanadella's recent View.
That digital transformation projects are unlikely to
be the first point of call for cost-cutting exercises. We
also believe that one of the key strengths of Microsoft is
it's diversity of Revenue drivers.
There is currently some weakness in PC sales, which we
do expect to represent a headwind for Windows Revenue. However,
we think any Windows weakness is
likely to be compensated by growth in
other areas, including a growing it security
business. We also think the resilience of office
may be underappreciated.
There are huge switching costs involved any Enterprise
looking to consider migration away
from word PowerPoint and Excel demonstrating.
Its pricing power Microsoft recently
put through substantial price increases on Office
365 ranging from 9 to
25% depending on the subscription. We
believe this adds credibility to the prospect of
Microsoft being able to deliver strong Revenue growth even
in more challenging times.