MSFT: Pivoting into the Future

12/25/2015 9:00 am EST


Michael Berger

President & Founder,

Though many people thought it missed out on the mobile opportunity, Michael Berger, of, illustrates why he feels the largest software company in the world will most likely emerge as one of the few HyperScale Cloud vendors due to its Azure platform.

Microsoft (MSFT) is the largest software company in the world and they are known for their Windows operating system and their Office productive software. MSFT also serves adjacent markets which include server operating systems, enterprise applications, video game consoles, and Cloud computing with its Azure and Office 365 product lines.

MSFT has done a good job pivoting its business after many people thought the company missed out on the mobile opportunity. We see MSFT as one of the only HyperScale hybrid Cloud vendors that is able to integrate Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS) with a large installed base of on premise server and client software. Not only does MSFT represent a growth opportunity for investors, but the company also offers a 2.7% dividend.

Azure Platform Puts MSFT in an Elite Group of Companies

Microsoft will most likely emerge as one of the few HyperScale Cloud vendors due to its Azure platform. This puts MSFT in a group that includes Amazon Web Services, Google, and Oracle in PaaS. CEO Satya Nadella’s strategy toward non-Microsoft platforms will make Azure a dominant player in PaaS as well as in IaaS.
Office Is Not Going Anywhere

Even though demand for Google Apps continues to increase, Office appears to be accelerating several years into the transition to the Cloud. Office 365 has maintained customer loyalty due to its competitive price point and cross-platform value.


We expect to see MSFT continue to execute on business initiatives during 2016 and continue to extend its share in new markets. The continued market penetration leads us to believe that MSFT will see 10% growth in EPS during fiscal year 2017 and 2018.

Based on historical multiples, we think investors can generate approximately 20% total return due to price appreciation and the company’s 2.7% dividend yield.

Michael Berger, Founder and President,

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