Microsoft Shares Soar to Record on Earnings Boost From Cloud • Hacker News Board

Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud

#11

Post by csydas » Fri, Oct 21, 2016, 3:44 PM UTC

drieddust wrote: post #7

tonyedgecombe wrote: post #2

Is it a real increase in revenue or just smoke and mirrors from shifting Office revenue again?

Only service I have really seen being used is O365 emails. Rest of the Azure is not really being used by most of our customer. They are still dipping their toes in water so yeah it look like smoke and mirrors. At least in my anecdotal experience. Edit: I don't have an issue with down votes but seems like some people are angry. I just shared my experience.Can Microsoft show what is the revenue growth in absolute terms…

Virtualization is taking to the cloud in a big way this year and next. Most of my clients are pricing out between azure, aws, and local providers/partners for their cloud VM needs. Vmware just announced a deal with Amazon I believe and windows server 2016 comes with gobs of stuff that's pretty clearly meant for being hosted up on azure.

It's not there yet for many since the WAN component is still too weak for many companies to migrate but when the need to remake comes up I'm seeing it in the cloud more and more, or dummy drops to the cloud. (Usb backup on premise and deliver the drive to cloud provider.)

Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud

#12

Post by FUCK__GOOGLE » Fri, Oct 21, 2016, 3:45 PM UTC

tonyedgecombe wrote: post #2

Is it a real increase in revenue or just smoke and mirrors from shifting Office revenue again?

My experience with Azure thus far has been not so great. Everything mostly works but the portal is just so painfully slow and difficult to coax along. Kind of doubt they will see the sort of exciting growth that AWS has seen, so yeah looking at accounting details would be key here.

Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud

#13

Post by samfisher83 » Fri, Oct 21, 2016, 3:46 PM UTC

fanzhang wrote: post #8

samfisher83 wrote: post #3

If you look at the numbers their cash over the past few years have been relatively stable about ~24 billion in FCF. Now if we model that as a Perpetuity with 10% rate which has been historical rate of the market we get 24/.1=240 (not including inflation) if we add Net Tang Assets and some tax benefits if we write down goodwill we we end up with 56billion. However MSFT is trading for 450 billion. Where is this extra 1…

In this era of low interest rates, you might model the above with a 7% rate instead of 10%, and then you get closer.

You don't use interest rates you use a discount rate. Basically what you can earn with that money if you invest in the market.

Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud

#14

Post by akg_67 » Fri, Oct 21, 2016, 3:49 PM UTC

drieddust wrote: post #7

tonyedgecombe wrote: post #2

Is it a real increase in revenue or just smoke and mirrors from shifting Office revenue again?

Only service I have really seen being used is O365 emails. Rest of the Azure is not really being used by most of our customer. They are still dipping their toes in water so yeah it look like smoke and mirrors. At least in my anecdotal experience. Edit: I don't have an issue with down votes but seems like some people are angry. I just shared my experience.Can Microsoft show what is the revenue growth in absolute terms…

IMO, Enterprise adoption of Azure is growing specially enterprises that rely on Microsoft stack exclusively.

In last quarter, I personally suggested to few friends at Microsoft stack dependent companies to migrate to Azure instead of mucking around with colo hardware, VMware, VM management, licensing etc. for external facing services. It is a change for me. Previously I used to suggest moving to Linux/open source stack to migrate to VPS providers or AWS.

Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud

#15

Post by calbear81 » Fri, Oct 21, 2016, 3:51 PM UTC

lokeshk wrote: post #10

But, I thought pg said Microsoft was dead.

The old Ballmer era Microsoft is dead; the Satya led Microsoft has risen.

Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud

#16

Post by dharmon » Fri, Oct 21, 2016, 3:54 PM UTC

samfisher83 wrote: post #13

fanzhang wrote: post #8

Earlier quoted context omitted.

In this era of low interest rates, you might model the above with a 7% rate instead of 10%, and then you get closer.

You don't use interest rates you use a discount rate. Basically what you can earn with that money if you invest in the market.

He's saying that in this low interest rate environment investors are not demanding 10%, but would rather be happy with something like 7 or 8% as their hurdle rate.

In finance speak, MSFT's cost of capital is dependent on the risk-free rate, usually the 10-year US treasury, which is incredibly low right now, thus moving MSFT's cost of capital (the 0.1 in your denominator) lower. A quick search tells me that their cost of capital is currently around 7%.

Also, you can't add assets in, since operating assets are required to generate that FCF. You can add in cash, though, which is pretty substantial for MSFT.

Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud

#17

Post by drieddust » Fri, Oct 21, 2016, 4:00 PM UTC

jbigelow76 wrote: post #9

drieddust wrote: post #7

Earlier quoted context omitted.

Only service I have really seen being used is O365 emails. Rest of the Azure is not really being used by most of our customer. They are still dipping their toes in water so yeah it look like smoke and mirrors. At least in my anecdotal experience. Edit: I don't have an issue with down votes but seems like some people are angry. I just shared my experience.Can Microsoft show what is the revenue growth in absolute terms…

Google reported revenue of $20.76 billion last quarter, but I don't use Google as my search engine, so I'm pretty skeptical of this number.

You should be if Google suddenly starts reporting revenue growth in "Self Driving Cars" category and their total revenue still stays $20.76 billion.

Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud

#18

Post by samfisher83 » Fri, Oct 21, 2016, 4:03 PM UTC

dharmon wrote: post #16

samfisher83 wrote: post #13

Earlier quoted context omitted.

You don't use interest rates you use a discount rate. Basically what you can earn with that money if you invest in the market.

He's saying that in this low interest rate environment investors are not demanding 10%, but would rather be happy with something like 7 or 8% as their hurdle rate. In finance speak, MSFT's cost of capital is dependent on the risk-free rate, usually the 10-year US treasury, which is incredibly low right now, thus moving MSFT's cost of capital (the 0.1 in your denominator) lower. A quick search tells me that their cost…

If you are evaluating a project from the MSFT perspective you might want to use their cost of capital, but as an investor if I can go get 10% why would I want to use 7% as my rate?

In any case lets use your 7% you end up with 400bill which is still 50billion less than what it is trading at.

Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud

#19

Post by WayneBro » Fri, Oct 21, 2016, 4:05 PM UTC

lokeshk wrote: post #10

But, I thought pg said Microsoft was dead.

There are two things that we know for sure:

- Microsoft is not dead.

- Paul Graham is a tedious windbag. (Look it up.)

Re: Microsoft Shares Soar to Record on Earnings Boost From Cloud

#20

Post by thedangler » Fri, Oct 21, 2016, 4:11 PM UTC

It's funny that I didn't take my own advice 4 years ago. A colleague asked me what stocks she should buy and I said Microsoft. She bought in at around $20 something.

I don't know how many she bought.