Satya Nadella Remade MSFT Stock
Microsoft Corporation (NASDAQ:MSFT) was a sleeping giant while Steve Ballmer was its chief executive officer, but now the giant is waking. MSFT stock has spiked to 61.7% under the tenure of new CEO Satya Nadella. And he’s just getting started.
Nadella has rebuilt Microsoft for the 21st century. He’s turned it into a ferocious competitor with the agility and ingenuity to tackle the modern tech sector. The truth is, I have absolute faith in MSFT stock as long as Nadella is steering the ship.
From where I’m standing, it looks like he’ll restore Microsoft stock to its former glory as the “golden goose” of tech. After all, Microsoft is the company that made Bill Gates into the richest man on the planet! He’s been on top or near the top of that list for decades.
Gates’s wealth recently hit a new record of $90.0 billion, the bulk of which he made from MSFT stock. Aside from founding the company, his success lay in a secret strategy that few people have been able to identify. Nadella has found that missing ingredient.
As someone who covers the industry, I’ve seen it first-hand, buried in the company’s press releases. You can see it if you pay close attention to the company’s quiet decisions; the ones that don’t get plastered across front-page headlines.
Nadella understands that Microsoft belongs in the office. Unlike Apple Inc. (NASDAQ:AAPL) or Samsung Electronics Co Ltd (KRX:005930), its heart and soul is buried in arcane software like “Word” and “Excel,” and he understands that.
For instance, at the Aspen Ideas Festival in June, Nadella was asked what he thought was Microsoft’s best product to date. He didn’t even hesitate. (Source: “Satya Nadella cannot imagine the world without this one Microsoft product,” Business Insider, June 29, 2016.)
“Think about a world without Excel,” he said. “That’s just impossible for me … People couldn’t make sense of numbers before, and now everybody can.”
3 Deals That Fuel Microsoft Stock Growth
Forget the flashy apps and shiny startups. Boring products like Microsoft Office make money, and that translates to growth in MSFT stock. At the end of the day, that’s what keeps the lights on, so you it’s where Nadella is focusing the company’s efforts.
Here are three deals which help explain what I’m talking about:
1. Two 800-Pound Gorillas Become Friends
Although Microsoft’s products are a mainstay in white-collar offices, the company was a little weak on industrial-grade software. That’s why they signed a partnership with General Electric Company (NYSE:GE). The industrial giant is going to offer all of its industrial software via Microsoft’s “Azure” platform, which effectively sets the stage for enormous gains to MSFT stock.
2. Getting a Monster-Sized Data Pile
Jaws dropped when Microsoft shelled out $26.2 billion for LinkedIn Corp (NYSE:LNKD), but I was actually excited about that deal. It is the only social media company designed for working professionals, meaning its data pile is a treasure trove of information about the business landscape. Not only does that help Microsoft stock by giving Azure a gigantic client, but it feeds a ton of data into “Cortana”, their artificial intelligence (AI) software. For more details on that purchase, check out my review of Microsoft’s last quarter. If there’s any deal that gives MSFT stock an edge, it’s this acquisition.
3. Making In-Roads Into China
Since Microsoft licenses a bunch of patents to smartphone makers, some analysts are worried that slowing demand could hurt Microsoft stock. Those analysts obviously aren’t paying attention to the deal that Nadella just lined up with Lenovo Group Limited (ADR) (OTCMKTS:LNVGY), the phenomenal Chinese electronics manufacturer. The deal is structured such that Lenovo has to preinstall Microsoft core apps onto its premium devices. That includes “Office,” “OneDrive,” and “Skype.” Having its software preinstalled on devices is precisely how Microsoft became a behemoth in the first place, so Nadella is just replicating that strategy with an eye towards China. Once users are embedded in the Microsoft ecosystem, the company can invade Chinese offices too. Considering that China is the final frontier of electronics growth, it’s a brilliant move to bolster Microsoft stock over the coming decades. (Source: “Why Microsoft’s New Deal With Lenovo Matters,” Fortune, August 23, 2016.)