Will Microsoft Corporation's (NASDAQ: MSFT) Transformation Drive Future Growth?

Will Microsoft Corporation’s (NASDAQ: MSFT) Transformation Drive Future Growth?

February 16, 2018, BY Simon Mugo - Contributor | Subscribe to RSS

Microsoft Corporation (NASDAQ: MSFT) has undergone a major transformation under the leadership of Satya Nadella who took over as CEO from Steve Ballmer in 2014. Up until Satya’s appointment as a CEO, Microsoft was viewed as a dinosaur in the tech industry, but this perspective has dramatically changed under its new CEO.

Article Summary

Microsoft has undergone a major transformation under Satya Nadella.

The company’s focus on cloud services is paying off.

The company’s future growth prospects look promising.

Here’s the trading report on MSFT.

To provide context as to the extent of Microsoft’s transformation, Steve Ballmer once stated that the iPhone would never get any market share during an interview with ABC back in 2007. This mistake went on to cost Microsoft a fortune as the iPhone propelled Apple Inc. (NASDAQ: AAPL) to new heights of success by becoming extremely popular and generating billions of dollars in revenues for Apple.

Satya’s appointment as Microsoft CEO marked the turning point for the company’s growth trajectory given his focus on promoting cloud computing through the company’s Azure platform. Currently, Microsoft is the number two global vendor of cloud services trailing Amazon.com, Inc. (NASDAQ: AMZN) by a small margin.

The company continues to grow its customer base for many of its products such as Office 365, which ended the last quarter with 120 million monthly active users, while its LinkedIn platform had 530 million members. The company also grew its revenues from the Azure cloud platform by 90% in the past quarter, which is a reliable indicator of the company’s future growth prospects.

Apart from its innovative product lineup, the company manages its finances extremely well given that it ended fiscal 2017 with $133 billion in cash and short-term investments. Given the company’s long-term debt of about $86 billion, Microsoft has a strong net cash position, which allows it to cover its dividend payments and to fund its share buyback program.

Most analysts predict Microsoft’s future growth rate at slightly above 10%, which is quite substantial for the tech company, but is much lower than Alphabet Inc’s (NASDAQ: GOOGL) projected 20% annual growth rate. Microsoft’s future appears quite promising even in the ever-changing and highly competitive tech sector.

However, it is not enough to know that a stock is likely to head higher, or lower this year. As an investor or trader, it is important to time your entry and exit points accurately in order to minimize risk and maximize your profit potential.

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