Cloud Computing: Four Lightning Bolts From the Sector

Cloud computing is a game-changer, affecting the entire value chain. The industry involves players offering services like data centers, software as a service (SaaS) and networking equipment. Every player in this industry is trying to integrate its offerings and cater to the requirements of cloud and data centers. Still an evolving industry, competition is expected to intensify and data centers will be the epicenter.We believe the companies best positioned to take advantage of the opportunities offered by this industry include Equinix (EQIX), Interxion (INXN), Salesforce.com (CRM) and Cisco (CSCO).

Cloud computing has revolutionized how the IT industry deals with the addition, manipulation, retrieval and submission of data. The transformation has, to some extent, affected every player in the IT ecosystem, while paving the way for several new pure play companies in the cloud computing industry. Read more.

Microsoft’s 1QFY14 Earnings: Back on Track

Microsoft Corporation’s (MSFT) earnings for the last quarter of its 2013 fiscal year (FY13) had left investors deeply unsatisfied, and its stock price had dropped more than 11% subsequent to the announcement. Its results had been in keeping with recent trends however – Microsoft had missed revenue expectations in four out of the five preceding quarters as well.

Investors had many reasons to turn bearish on the company – the Microsoft management had announced a large write-down of its Surface inventory, which had added to worries arising from the overall slowing demand for PCs, the company’s marginal presence in the smartphone and tablet markets, and skepticism on its restructuring initiatives and devices and services strategy.

This quarter (1QFY14), however, Microsoft beat analyst expectations due to strong growth in its enterprise segment, and commendable performance in its consumer segments. Investors rushed to snap up the stock, which pushed the share-price up 6%. Read more.

The Two Best Dividend Stocks to Buy in the Tech Sector

Microsoft, the world’s largest software maker by revenues, has paid dividends since 2003. It is believed to be a dividend haven, considering its sustained growth in payouts to investors.

Microsoft has recently restructured itself as ‘One Microsoft’. After the shake-up, the management wants to focus on major technology trends such as big data, cloud services and mobile devices. It has already acquired Nokia’s handset business, which accounts for 81% of its Windows Phone sales.
With the acquisition, Microsoft hopes to increase its share in the smartphone market to 15% by 2018. It also estimates that Nokia’s businesses will bring in $2.3-4.5 billion annually in operating income.

In the cloud services arena, Microsoft’s office 365 has an annual run-rate of more than $1.5 billion, and more than 350% growth in its seats. Windows Azure, its cloud services offering, is growing at a rate of 200%, with more than 50% of the Fortune 500 companies already using it. Owing to stellar growth in these areas, Microsoft has raised its capex guidance from $5.6 billion to $6.5 billion in 2014. The increased capex will go towards ramping up cloud services. Read more.

The Smartphone Industry – Are the Phones Getting Any Smarter?

Cellphones, once considered a luxury, are now a necessity for almost everyone. They have evolved from big, bulky, basic phones to highly sophisticated communication and entertainment devices. They are now capable of helping users make sophisticated decisions with the help of the cutting-edge technology embedded in them.

Apple Inc. (AAPL), more specifically the late Steve Jobs, is heralded as the pioneer of smartphones. Apple’s iPhone was introduced in 2007, and it revolutionized the cell phone industry and the world. The iPhone, with its completely touch- and gesture-based user interface, transformed the entire smartphone ecosystem.

Android, a mobile operating software developed by Google using an open source platform, was the next big thing in the industry. The introduction of Android and cheap Android powered devices led to the increasing adoption of smartphones across various categories of consumers. So much so that if the iPhone was responsible for revolutionizing the smartphone, then Android was responsible for commoditizing it. Read more.

The Gates Are Open for a New CEO!

Steve Ballmer, current CEO of Microsoft Corporation (MSFT), seemed upbeat when he announced major restructuring plans for the software giant in August. His announcement was followed by a major internal shake-up, which resulted in the transformation of Microsoft to ‘One Microsoft’. Microsoft’s different business divisions were replaced with departments based on their functionality. Following the shakeup, One Microsoft is to focus on creating a ‘family of devices and services’ rather than packaged software.

It came as a bit of a shock when, just a month after such a major transformation of the company, Ballmer announced that he was planning to retire. Ballmer had joined Microsoft in 1980 as the 30^th employee and the first business manager hired by Bill Gates himself. He took over from Gates as the company’s CEO in 2000.

His retirement has fueled speculation that he had been under intense pressure from Microsoft’s Board of Directors for not catching up to major industry trends. After all, it is no secret that stakeholders were holding him responsible for Microsoft’s lackluster performance. Read more.