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Analysis of Microsoft share price

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Latest news

Microsoft: ready to take on Discord app

29/03/2021 - 12h49

Microsoft is not backing down in its plan to expand into the artificial intelligence sector. The group plans to acquire the Discord application, despite the $10 billion price tag.

Elements that can influence the price of this asset:

Analysis N°1

First of all, let's talk about the development and growth opportunities of this company. The Microsoft group has an extremely large amount of capital that has not been exploited as a whole. It is therefore important to keep an eye on the group's R&D investments as well as possible takeovers of companies and start-ups operating in high-tech sectors that could enable Microsoft to remain a leader in technological products and services.

Analysis N°2

The Microsoft group also intends to fully exploit its customer base. Indeed, if sales are currently stagnating, a good marketing strategy to encourage current customers to spend more could boost the company's growth. All strategies implemented in this regard will have to be studied with the greatest care because of the significant impact they can have on the price of this share.

Analysis N°3

For example, while Microsoft enjoys a strong reputation in its core areas of expertise, computers and software, it lags behind in other high-growth segments such as mobile technology. Other large companies such as Apple have seen the opportunities in this sector more quickly and have taken advantage of them. The future of Microsoft products in this area could have a significant impact on its stock market performance.

Analysis N°4

As we have seen through Microsoft's weaknesses, the prices of the products offered by the group remain relatively high compared to those of many more accessible competitors. By continuing on this path, Microsoft is depriving itself of part of the market. It is therefore interesting to check whether the company will implement a strategy to market more accessible software and products in order to regain some market share.

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General presentation of Microsoft

The Microsoft Company was created in 1975 in the United States by its founders Bill Gates and Paul Allen who are nowadays renowned as two of the great American leaders in this sector.

The Microsoft Company rapidly claimed its place in the spotlight by becoming number one worldwide in the development and commercialisation of operational systems for computers and software for PCs and servers. Following on from that, Microsoft reaped the benefits of the development of this sector by widening its activities with the creation of Windows Live.

But the success of this company has been somewhat controversial in the past as certain competitors believe that it has abused its position as market leader. The annual turnover of the Microsoft Company reaches around 58 billion Euros and its net annual profit is around 16 billion Euros.

Here you can learn how the Microsoft Company generates its turnover according to its activity sectors. In fact, this company uses seven products sectors that include the following major products; Client, Servers and Tools, Information Worker, Microsoft Business Solutions, MSN, Mobile and Embedded Devices, and Home and Entertainment.

  • In the Client sector are the Windows operating systems that are increasingly linked to equipment purchase as they are pre-installed on numerous computers.
  • The Servers and Tools sector includes the Exchange server among other things.
  • The Information Worker sector includes office software such as Word and Excel and the distribution of the related licenses.

These three sectors alone generate the major part of the Microsoft Company’s turnover.

Due to the diversity of its products and services Microsoft was able to introduce its shares onto the American Nasdaq stock market on 13th March 1986. The company went on to become the second largest in the world relating to the size of its stock market capital with a value of 408.68 billion U.S. dollars in November 2014.

Since the 1st December 2004 the company has been distributing dividends to its shareholders at $3 per share, notably due to a related tax reduction of 35% to 15% at that time. That same year Microsoft therefore distributed no less than 28 billion dollars to its shareholders.

Analysis of Microsoft share price
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The major competitors of Microsoft

The Microsoft group is still the leader in its preferred field of operating systems, since its Windows system is still installed on a large majority of computers. However, in the face of ever-increasing technological development, it has been able to diversify its activities and is thus facing a new form of competition affecting the new technology sectors in general.

To better understand which companies are likely to take market share from Microsoft, here are some of its main competitors around the world, most of which, as you will see, are publicly traded companies.

Apple

The Apple Group is an American multinational company that creates and sells consumer electronics and software. The group employs more than 137,000 people and operates in nearly 25 different countries around the world.

Hewlett-Packard Company

This other American multinational company initially present in electronics and instrumentation has evolved towards computers, printers, servers and networks, software and multimedia. Its headquarters are based in Palo Alto, California, in the Silicon Valley.

IBM

IBM stands for International Business Machine and is an American multinational company specialising in computer hardware, software and services. The company is one of the giants in this sector and was the world's largest market capitalisation during the 1970s and 1980s.

Oracle Corporation

This US company develops a variety of products including its database management system Oracle Database, the Oracle Weblogic Server application server, the Oracle E-Business Suite enterprise resource planning system and the Oracle Cloud Infrastructure cloud computing offering. It is the second largest software company in terms of revenue.

Google

Google is an American company belonging to the Alphabet group and specialising in technology services. It was founded in 1998 in Silicon Valley in California and also gave its name to the famous search engine.

Nintendo

In the field of video games, Microsoft is also in competition with Nintendo, a Japanese multinational specialising in the manufacture of video game consoles and the design of games for consoles. It has notably created the Wii, the GameCube, the NES or the Nintendo DS.

Sony Corporation

This Japanese multinational is active in the fields of electronics, telephony, computers, video games, music, cinema and audiovisuals.

Yahoo! Inc

This American web services company, which belongs to the Verizon Media group, is based in California and was made famous by its search engine. Yahoo currently offers many free and paid services including email, instant messaging, web hosting and news portals.

Intel Corporation

The US company Intel is currently the world's largest semiconductor manufacturer in terms of revenue. It produces microprocessors, motherboards, flash memory and graphics processors. The group is listed on the Nasdaq.

Amazon.com, Inc

Amazon is an American e-commerce company and one of the giants of the web that has evolved from its original business of selling books to selling all kinds of products online. Its shares have been listed on the Nasdaq since 1997.

Cisco Systems

Finally, Cisco Systems is an American company specialising in servers, routers and switches.


The major partners of Microsoft

Microsoft is partnered with several different types of companies throughout the world certain of which are also quoted on the stock markets.

Schneider Electric

This is notably the case with the Schneider Electric Company with a partnership related to the development of technology aimed at optimising operations and transforming products and services for assimilation with IoT (the Internet of Things).

Thales

Another partnership signed with Thales in 2015 is related to the launch of new services enabling the encrypting of sensitive information before being sent by email or storing it in the ‘cloud’.

Publicis

To conclude, Microsoft announced a partnership with Publicis with the objective of increasing the growth of online and offline data for the benefit of large companies.

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The factors in favour of a rise in the Microsoft share price:

Long bull strategies are common on Microsoft's share price, but before you launch into this type of position, you must of course make sure that this American group is able to maintain its growth in the years to come. To do this, it is essential to know the assets at your disposal. This is what we offer you here with a summary of the strengths of this value and the advantages of the Microsoft company.

Microsoft's major asset is undoubtedly its positioning on the global market. Indeed, this company is present in its sector of activity with products recognized for their high quality since about forty years. Thanks to its age and know-how, Microsoft has succeeded in winning over the general public and is now internationally recognized. The group's flagship products with computers and software are currently equipping countless households in developed countries, mainly but also in the rest of the world.

Customer loyalty is also another major asset of Microsoft. Indeed, and thanks to the very strong presence of Microsoft products in most households, the group has a loyal and very large customer base. These products also serve as a support to advertise complementary products or software developed by the company. For example, Windows operating systems always offer the latest updated version to users. Thanks to this well-established marketing system, Microsoft does not have to make much effort to promote its products and naturally renews the needs of its users.

As you may know, Microsoft ranks fifth in the world's largest companies in terms of capital value. This brings us to another undeniable advantage of this company. Indeed, the investment capacities of this group are enormous, which leaves many opportunities for innovation and research but also opportunities for takeovers that can bring a real plus to the group for its future competitiveness. This important capital also offers Microsoft the possibility of implementing a very aggressive marketing strategy that allows it to win more and more prospects.

Despite a system that does not integrate many free software, Microsoft stands out from its competitors in this area with quality products and services. In particular, it offers many options and responsive, high-quality customer support that contributes to the company's brand image.

Finally, the group's financial and economic balance sheet is a real asset to reassure and attract investors.  The objectives set are generally achieved.

The factors in favour of a drop in the Microsoft share price:

As we have just seen, the Microsoft group has many strengths to ensure its future sustainability. But before embarking on a long-term bull strategy, you must of course also know its weaknesses and the elements that may potentially hinder its development and growth in the years to come. This is precisely what we propose here with a summary of the main weaknesses of this value.

The first major defect of the Microsoft group concerns its pricing policy, often considered too high. Indeed, Microsoft must increasingly face significant competition from free and open source software that directly compete with its own. This applies, for example, to the OpenOffice suite, which has the same functions as the Microsoft Office suite but is completely free of charge. This is also the case for some operating systems such as Linux, which are available free of charge. Although Microsoft relies primarily on the quality of its products, it loses many customers and prospects as a result of this pricing policy and the situation on this point could of course worsen over time, particularly because of a decline in purchasing power in the most developed countries.

On the other hand, the Microsoft group also has many competitors in the marketing of its paid products and services. Indeed, there are more and more companies specializing in technology and IT and, whereas Microsoft used to face only one or two companies, today there are hundreds of them trying to take market share from it. Of course, it is still the giants Apple and Google that are the most shocking to this company because they are also multinationals with significant capital and therefore equally high innovation capacities.  This growing competition offers consumers more choice among the products in this range, which of course is increasingly damaging to Microsoft.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions.

Frequently Asked Questions

What has been the recent progress of the Microsoft share price?

Since its original IPO the Microsoft share price has of course progressed enormously and thereby gained many points. However over the last few years its progress has been particularly positive. In fact over the last year alone, 2019, this share price experienced a rise of 28.31% and if we examine the movements in this asset over the last five years we can observe an overall growth of 270.27% in total.

What are the latest financial figures relating to Microsoft?

In March 2020 the stock market capital of the Microsoft Group was 1,034 billion dollars. The actual equity of this company in fact amounts to 102.33 billion dollars. The debt of the Microsoft Group at the same time amounts to 32.5 billion dollars. The group’s turnover for the 2019 financial year amounts to 125.8 billion dollars and the net profit of the group resulted in 39.2 billion dollars for the same period.

How significant are the lobbying activities of Microsoft?

Concerning the lobbying activities exercised by Microsoft in the European Union, we know that Microsoft has been registered on the Transparency Register of the European Commission for lobbying activities since 2009. Relating to these activities in the United States we also note that this group spends several million dollars each year on lobbying.

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