HelenJanet
2023-02-05

As of February 2023 Microsoft has a market cap of USD 1.923 Trillion. This makes Microsoft the world's second most valuable company by market cap. The market capitalization, commonly called market cap, is the total market value of a publicly traded company's outstanding shares and is commonly used to measure how much a company is worth.

The multinational corporation is one of the biggest tech companies in the world and remains a leader in software development.

No other company in the world provides such comprehensive business solutions as Microsoft does. Building up business technology ecosystem from hardware and operating system to software and cloud service, Microsoft can empower business from startups to global enterprises.

Innovation is often necessary for companies to adapt and overcome the challenges of change. Achieving organizational and economic growth through innovation is key to staying afloat in today's highly competitive world. Innovations don't have to be major breakthroughs in technology or new business models; they can be as simple as upgrades to a company's customer service or features added to an existing product.

Unforeseen challenges are inevitable in business. Innovation can help a company to stay ahead of the curve and grow the company in the process. The impact of the pandemic, declining performance, layoffs and acquisitions on hold are some of the challenges faced by Microsoft.

Microsoft has always been trying to find ways to become more innovative, especially around its work in AI, and it is putting processes in place to do so. This is in order to secure its position as the leading AI provider among its big tech rivals.

Microsoft’s further multibillion dollar investment in OpenAI, deepening ties with the startup behind the chatbot sensation ChatGPT.

Recently touting a revolution in artificial intelligence (AI), Microsoft is building on a bet it made on OpenAI nearly 4 years ago, when it dedicated $1 billion for the startup.

Microsoft is continuing its work with its partner OpenAI through a multiyear, multibillion-dollar investment following two previous investments in 2019 and 2021. This partnership seeks to pioneer AI development and distribution across the world.

The partnership between OpenAI and Microsoft enables developers to utilize AI models like ChatGPT to build more intelligent and human-like conversational interfaces such as the latest version which allows users to communicate with prompts, write text and modify code. Additionally, with Azure's global network and infrastructure, developers can deploy and scale their applications to reach users worldwide.

Looking forward to Microsoft’s new features in AI-enabled tools across its products and services.  

Such low revenue growth. Where is the "future" of Microsoft? - OpenAI?

@Tiger_Academy：
Source: Google On January 24, 2023, $Microsoft(MSFT)$ released its fiscal Q2 2023 financial results after the market closed.(October 1, 2022 - December 31, 2022) Overall: Revenue growth slowed but still beat expectations. Revenue from its core business, intelligent cloud, remained relatively resilient, offsetting the impact of a strong dollar and a decline in the Personal Computingbusiness that helped the company beat expectations. Here, I will explain it in three steps: 1. Performance of Microsoft's Q2 financial report in 2023. 2. The reason for the decline? -- Hot events. 3. Where is the "future" of Microsoft? 01 | Performance of Microsoft's Q2 financial report in 2023 Investors who are familiar with Microsoft (MSFT) know that there are three main parts of Microsoft's business: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Ⅰ.The IncomeStatement (Shows the “financial muscle” of a company) Source: APP ECONOMY INSIGHTS Revenue rose 2% Y/Y to $52.7 billion, $450 million below consensus (and 7% at neutral exchange rates). Productivity and Business Processes grew 7% Y/Y to $17 billion (13% at neutral exchange rates). Office business products and cloud services revenue grew 7% Y/Y (At a neutral exchange rate, it was up 14% Y/Y). Office consumer products and cloud services revenue fell 2% Y/Y( 3% Y/Y at neutral exchange rates). LinkedIn's revenue grew 10% Y/Y (At a neutral exchange rate, it was up 14% Y/Y). Dynamic's product and cloud services revenue grew 13% Y/Y. (20% Y/Y at neutral exchange rates) Intelligent Cloud grew +18% Y/Y to $21.5 billion (24% at neutral exchange rates). Revenue from server products and cloud services grew 20% Y/Y (At neutral exchange rates, it was + 26% Y/Y) More Personal Computing fell -19% to $14.2 billion. (-16% Y/Y at neutral exchange rates) Windows OEM revenue was down 39% Y/Y. Windows Business products and cloud services revenue -3% Y/Y. ( +3% Y/Y at neutral exchange rates) Xbox content and services revenue fell 12% Y/Y . (At a neutral exchange rate, it was down 8% Y/Y) Search and news advertising revenue rose 10% Y/Y. (At a neutral exchange rate, it was +15% Y/Y) Equipment revenue fell 39% Y/Y. (At a neutral exchange rate, it was -34% Y/Y) *Nearly half of Microsoft's sales come from overseas, and the rising dollar has cut into Microsoft's revenue. Therefore, neutral exchange rate is the performance data excluding exchange rate factors. Gross margins were 67% (-10% Y/Y and -2% Q/Q) Operating margins were 39% (-10% Y/Y and -4% Q/Q) non-GAAP EPS was $2.32 (-6% Y/Y) Ⅱ.The Balance Sheet (Shows the skeleton of a company) Cash and cash equivalents: $100 billion. Long-term debt and leases: $71 billion. Ⅲ. Cash flow Statement (The company's blood circulation system) Operating cash flow was $11.2 billion (Profit margin is 21%, -7% Y/Y) After reading the above data, let me give a simple interpretation: 1. Microsoft's total revenue in Q2 2023 was $52.7 billion, +2% Y/Y and the lowest in the last six fiscal years. In addition, both gross and operating margins are in decline. 2. In terms of the performance of core businesses, Productivity and Business Processes and Intelligent Cloud are relatively impressive, withyear-on-yeargrowth of 13% and 24% respectively under neutral exchange rate. In line with guidance. 3. Worst of all is Microsoft's personal computing business. Windows, Xbox, Surface and search advertising contributed $14.24 billion in fiscal Q2, down 19% Y/Y (Wall Street analysts were expecting a 16% decline). However, Windows OEM for PC device makers was down 39% year-over-year. (A 15% decline from the fiscal first quarter was worse). Tips: Research firm Gartner recently reported that growth in the global PC business hit its lowest level on record in the fourth quarter of 2022. As a result, Microsoft's three core businesses -- Productivity and Business Processes and Intelligent Cloud -- continue to evolve. The Personal computing business performed relatively poorly. 02 | The reason for the decline? -- Hot events Many investors may be wondering what's causing Microsoft's current weakness. Let me summarize some of the key recent events for Microsoft. Ⅰ. Global layoffs Source: APP ECONOMY INSIGHTS In the first month of 2023, Microsoft CEO Satya Nadella announced 10,000 job cuts in response to slowing business growth. As you can see from the chart above, Microsoft hired 40,000 new employees in 2022 alone. The cuts represent nearly 5% of the 221,000 employees. Ⅱ. The acquisition of $Activision Blizzard(ATVI)$ was halted Source: Google In December 2022, one of the largest technology acquisitions in US history was blocked by the Biden administration. The U.S. Federal Trade Commission (FTC) had sued to prevent Microsoft's $69 billion acquisition of video game publisher Activision Blizzard. The deal could give Microsoft an unfair advantage, not only in consoles but also in new areas such as subscription and cloud gaming, the FTC said. This would ultimately hinder innovation in the emerging gaming market. Currently, Microsoft management has not yet factored Activision Blizzard's expectations into its projections, but continues to expect the acquisition to be completed by June 2023. Put all this together and it's easy to see how the slump in global demand PC has weighed on Microsoft's stock price in the short term. The impact of the layoffs and the suspension of the Activision Blizzard deal made the new year even more difficult for Microsoft. 03 | Where is the "future" of Microsoft? Source: Google Given the impact of the pandemic, declining performance, layoffs and acquisitions on hold, 2022 doesn't look very friendly for Microsoft. What can we expect from Microsoft in 2023? Perhaps Microsoft's $10 billion stake in OpenAI is part of the answer. In January 2023, Microsoft negotiated a $10 billion investment with OpenAI. In December 2022, OpenAI released the latest version of ChatGPT, which allows users to communicate with prompts, write text, and modify code. The new version of OpenAI attracted more than a million users in the first five days of its release, and even Elon Musk, the world's richest man, called it "powerful" and "scary", tweeting that many people are "stuck in a freaking crazy ChatGPT loop." Erik Brynjolfsson, professor of economics and information technology at Stanford College, believes ChatGPT will become a writing computer that improves our ability to write. But whether it can make Bing (3% market share) a serious competitor to Google (93% market share) in search is where Wall Street is focusing its attention. What is clear is that Microsoft will do everything it can to secure its position as the leading AI provider among its big tech rivals. The growing partnership with OpenAI will greatly increase the user appeal of the new features in Microsoft's productivity apps and cloud services. The boom in intelligent cloud and the billion-dollar investment in OpenAI demonstrate Microsoft's strong cash flow and ambition to dominate the market. If ChatGPT's technology is commercialized by Microsoft, competitors could enter the scene and grab the AI pie. Here's what I believe: Microsoft is offering AI-enabled tools across its products and services, allowing users to subscribe over a long period of time. Leveraging this model will be necessary for Microsoft to succeed with its cloud infrastructure. Let us stay tuned! If you have a different opinion about Microsoft, please leave it in the comment section and you will receive 20-50 tiger coins. You can also @Tiger_Academy ~ You can learn more about financial statement analysis by clicking on the course link: US Stock Financial Statements For Beginners
Such low revenue growth. Where is the "future" of Microsoft? - OpenAI?

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  • shining87
    ·2023-02-06
    The multinational corporation is one of the biggest tech companies in the world and remains a leader in software development.
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    • HelenJanet: 
      👍👍[ShakeHands][ShakeHands]
      2023-02-06
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  • b1uesky
    ·2023-02-05
    Enjoy your weekend
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  • YorkTurner
    ·2023-02-06
    Msft is not a pure internet company, but i thought it can catch a ride on meta's train this evening?
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  • shining87
    ·2023-02-06
    MSFT and CRWD to have working agreement on projects sharing. Seems like CRWD will benefit more from this venture.
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  • XantheJuliana
    ·2023-02-06
    this company is way undervalued
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  • LMSunshine
    ·2023-02-11
    Great post❣️
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  • LEESIMON
    ·2023-02-05
    Ok
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  • Mathmagician
    ·2023-02-05
    .
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  • matthew_more
    ·2023-02-05
    ok
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  • SuccesInvst
    ·2023-02-05
    ✌️
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  • BGTAN
    ·2023-02-05
    ok
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  • YeGuChen
    ·2023-02-05
    Good
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  • sgFIREmm
    ·2023-02-05
    ok
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  • Cupcake1996
    ·2023-02-05
    ok
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  • 虎视Tan
    ·2023-02-05
    👍
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  • funimae
    ·2023-02-05
    K
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  • LEEKONGYONG
    ·2023-02-05
    Ok
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  • kktan
    ·2023-02-05
    ok
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  • CY_Ng
    ·2023-02-05
    1
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  • Matthew88
    ·2023-02-05
    k
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