Microsoft stock rose 20% in 2015
In our recent Microsoft series, we discussed Microsoft’s (MSFT) varied approaches, acquisitions, and launches to establish itself in the rapidly growing areas of mobile, cloud, and big data. It’s important to note that unlike IBM (IBM) and Oracle (ORCL), Microsoft stock cheered its investors. The stock rose by ~19% in 2015, as the following share price chart shows. In contrast, IBM has been grappling with revenue growth for the last few years. Its stock fell 14% in 2015. Oracle’s stockholders witnessed a similar fate. The company’s stock fell 18.8% in 2015.
As we highlighted in the past and in our recent IBM series, IBM made the decision to spin off of its low-margin hardware businesses to focus on the rapidly growing cloud, big data, and IoT (Internet of Things) space. IBM adopted the acquisitions and partnerships route to boost its Watson to leverage the benefits of the IoT revolution. IBM is trying to achieve long-term revenue growth by expanding its horizons.
Oracle is also struggling with its revenue growth. Although Oracle managed to retain a leadership position in the database space, the rising popularity of open-source databases helps the company’s dominant position in the database space.
“Mobile first cloud first” strategy benefited shareholders
Microsoft revised its corporate strategy “mobile first cloud first” in accordance with the change in the IT landscape. It’s going through the SMAC (social, mobile, analytics, and cloud) revolution. Although layoffs and the phone business weighed heavily on Microsoft’s results, it was the company’s success in the cloud—where it’s only behind Amazon (AMZN)—that pushed its stock to rise more than 25% in the past year. You can see this in the above chart. Microsoft’s strategic acquisitions and partnerships also provided a boost.
In January 2016, Microsoft announced the addition of MinecraftEdu and Event Zero to its acquisition portfolio. Event Zero is Microsoft’s first buyout in 2016. It’s an Australia (EWA)-based management software startup that would facilitate the expansion of Microsoft’s Skype for Business management tools.
MinecraftEdu is a modified version of Minecraft—a popular online game. It’s customized for use in schools. The financial details of the acquisition weren’t disclosed. In September 2014, Microsoft announced the acquisition of Mojang—the Swedish company that develops Minecraft—for $2.5 billion.