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

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

#21

Post by toomuchtodo » Fri, Oct 21, 2016, 4:18 PM UTC

WayneBro wrote: post #19

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.)

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

Well, I think this is a bit rude. I myself am not a PG fan, but let's not be mean people about it (I come here because the decency high water mark is usually higher than other forums).

Some people have a track record, and you might trust them more because of it. They might still be wrong. Don't hold people up as demigods?

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

#22

Post by trendia » Fri, Oct 21, 2016, 4:18 PM UTC

Analemma_ wrote: post #6

trendia wrote: post #5

Earlier quoted context omitted.

I wonder this too. Suppose you switch a product from one purchase of $120 to $10/month. In the first case, you can forecast $120 for every time a person buys the product. (Once every few years), so $120/2 years However, with $10/mo, you can forecast for every month in the upcoming years. So $240/2 years.

You guys know that institutional Wall Street investors aren't total idiots, right? They know this as well as you do. On the earnings call yesterday, more than one person specifically asked about the impact on revenue numbers of the migration from one-off to recurring payments, and seemed satisfied with the answers they got.

I'm not calling anyone an idiot, I'm just wondering whether their increase in share price is the result of developing new products or simply moving old products to a subscription model.

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

#23

Post by tim333 » Fri, Oct 21, 2016, 4:20 PM UTC

lokeshk wrote: post #10

But, I thought pg said Microsoft was dead.

pg's position was

"No one is even afraid of Microsoft anymore. They still make a lot of money—so does IBM, for that matter. But they're not dangerous."

Which I think remains largely true?

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

#24

Post by smallnamespace » Fri, Oct 21, 2016, 4:22 PM UTC

samfisher83 wrote: post #18

dharmon wrote: post #16

Earlier quoted context omitted.

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.

Where can you get a 10% annual return perpetuity?

Lending and borrowing rates are closely tied together since they're literally just two sides of the same market. Global long term rates have been slowly trending lower for the last few years.

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

#25

Post by Bud » Fri, Oct 21, 2016, 4:23 PM UTC

Even as a longtime Apple fan and inveterate Microsoft-hater, I have to hand it to Satya Nadella and Microsoft as a whole. Their success is deserved. I work with basically the full range of Microsoft products in my job and what I see is that everything has improved lately. Windows is better, Office is better, their cloud offerings are better, and even the Surface is better.

Now, if they would only improve the licensing process for Windows so that it doesn't drive people insane, that would be amazing.

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

#26

Post by sargun » Fri, Oct 21, 2016, 4:28 PM UTC

tonyedgecombe wrote: post #2

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

Office is cloud ;-)

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

#27

Post by epa » Fri, Oct 21, 2016, 4:35 PM UTC

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…

Your difference is known as off-balance sheet intangible assets. This represents Microsoft's employee capital, and how the group of individuals are able to produce future revenue generation.

How do you value having a group of the smartest people in a field working for you to make money?

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

#28

Post by ethbro » Fri, Oct 21, 2016, 4:35 PM UTC

tim333 wrote: post #23

lokeshk wrote: post #10

But, I thought pg said Microsoft was dead.

pg's position was "No one is even afraid of Microsoft anymore. They still make a lot of money—so does IBM, for that matter. But they're not dangerous." Which I think remains largely true?

I'm assuming this was said because people tend to be afraid of growth (eg Uber eating taxis).

But there's something to be said for being scared of companies that have already grown and are stable too. Or at least wary.

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

#29

Post by jesusjzp » Fri, Oct 21, 2016, 4:36 PM UTC

FUCK__GOOGLE wrote: post #12

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.

Portal is one of the interfaces for Azure resources management. I'd highly suggest you to take a look at PowerShell CLI and Azure Node.js CLI.

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

#30

Post by samfisher83 » Fri, Oct 21, 2016, 4:39 PM UTC

smallnamespace wrote: post #24

samfisher83 wrote: post #18

Earlier quoted context omitted.

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.

Where can you get a 10% annual return perpetuity? Lending and borrowing rates are closely tied together since they're literally just two sides of the same market. Global long term rates have been slowly trending lower for the last few years.

http://www.investopedia.com/ask/answers/042415/what-average-...

Over a long period of time that is what the market has returned. It is not guaranteed.One year it might be down 50% one year it might be 50%, but if you look at 30years S&P has returned about 7.5%. 10% is a just a round number makes math easier. You can plug in a different number my point its hard to get to 450 billion.