Alexandra PankratyevaWe can barely imagine modern life without Microsoft and its products. Almost 78% of the global desktops use Windows. Writing this article on MacBook, I still use Microsoft Word. So, what do we know about the tech giant’s performance in 2019? Let’s find out more to decide, whether it could bring us some exciting trading opportunities by the end of this year.
Key facts about Microsoft
Microsoft is one of the world’s largest and most successful technology companies in the world. Since its launch in 1975, the company has a relatively consistent history of success and continuous growth. In 2018, Microsoft gained $110 billion in global revenue, which is the company’s record high.
The growth of the business has made Microsoft’s top executives – Bill Gates, Paul Allen and others – some of the richest men and women in the world with multi-billion dollar fortunes.
Personal Computing still serves as Microsoft’s major segment, which is unsurprising. This segment includes Windows OS sales, Xbox gaming software and hardware revenues, as well as advertising revenues. Microsoft Windows OS continues to lead the world’s personal computer operating system market.
Being at the forefront of the world's technological transformation for 40 years, Microsoft continues dominating the technology industry.
Microsoft SWOT analysis
S – Strengths:
- World’s leading software developer – major cloud computing player ($23.2 billion in 2018)
- World’s largest company – ranks 4th with a market value of $750.6 billion
- Great market reach – operates in over 190 countries with 700 million installs
- Loyal customer base – sustainably good reputation with billions of customers remaining loyal to Microsoft brand for years
- Big market capitalisation – $776 billion, which makes it one of the biggest hi-tech companies globally.
- Continuous company growth
W Weaknesses:
- PC market overexposure
- Cybercrime
- Lack of innovation
- Internet browser segment failure
O – Opportunities:
- Cloud business growth – Microsoft cloud services (Azure, Office 365 commercial, dynamics 365) became extremely popular, giving the opportunity to grow cloud business further
- Artificial Intelligence and innovation – the company drives gaming and AI technologies
- Acquisitions and partnerships – Major acquisitions, such as LinkedIn for $26 billion and Skype for $8.5 billion, will help the company to increase its market share
- Smartphone industry – the fast-growing smartphone and tablets market offer good opportunity for Microsoft, despite the fact that it has very strong competitors, including Apple and Google
T – Threats
- Lack of diversity among Microsoft’s workforce
- Aggressive competition
- Consumers preferring mobile to desktop
- Open source projects, offering services for free
Microsoft major rivals
Although Microsoft brand is associated with strong success in the technology sector, it is involved in aggressive and prolonged competition with various rivals. Google and Apple stand out of this crowd and can be referred to as the major Microsoft's competitors so far.
Apple
Although Microsoft keeps its leading positions on the world's PC market with Windows’ ever-lasting popularity, Apple has managed to bite off a significant market portion with its game-changing products, including iPod, iPad and IPhone.
Windows still features in the majority of laptops and desktops worldwide, Microsoft falls far behind Apple in tablet and smartphone markets.
Microsoft and Google compete in almost every sphere of their activity, for example: Google vs. Bing, Android vs Windows Phone, Google app engine vs Windows Azure, Microsoft office vs. Google Apps, Google Chrome vs Internet Explorer, and finally Windows vs. Chrome OS.
Google has certainly shown its capability to enter new markets and dominate them, just like Microsoft itself used to do years ago. Microsoft still makes lots of money on Windows and Office licenses, although it still drags behind Google in the world of mobile devices and web-based computing.
Other Microsoft’s strong competitors include: SAP, IBM and Oracle.
Microsoft share price history
Stock market has seen a few companies that have been as successful as Microsoft over so many years. Microsoft has managed to build a lasting franchise, that brings revenue for its investors for decades.
Breaking down MSFT share price history, we may clearly define 3 major periods:
- 1980s to 2000 – the global tech boom helped to drive Microsoft’s stock higher. PCs became an indispensable part of business and personal life, creating the demand for further technological innovation and the need of hard- and software, capable to keep up with the growing demand.
- 2000 to 2002 – Microsoft’s stock growth prospects diminished. The company had two major cash cows – Windows OS and Office suite – which helped to bring consistent earnings and revenue. However, the company took a back seat in the smartphone, portable music player and tablet markets, giving away its status of a major market mover to its rivals in the tech world.
- 2013 to present time – Microsoft entered the recent phase of its history, which is pretty successful. The shares have been growing rapidly, driven by the company’s initiatives to move towards new directions, such as cloud computing and mobile. Besides, the company made several huge steps to grow through acquisitions (LinkedIn) and partnerships (Samsung and Lenovo).
Microsoft stock performance today
The escalated trade war between Donald Trump and China throws a shadow on tech stocks. Since many companies are heavily exposed to China, it makes investors think twice, choosing a tech stock to invest in. However, Microsoft stock price forecast still looks quite positive, as MSFT tops the list of stocks worth buying.
Once considered a “mature” stock, usually owned for stability instead of growth, Microsoft has all the chances to be seen as a growth stock again. Under the leadership of Satya Nadella, who took the CEO post in 2014, the company has escalated its business towards a new growth engine.
Over the last five years Microsoft stock has moved up by 231%, mainly due to the success of its intelligent cloud business solutions. In fiscal year 2019, ending June 31, the company’s revenue comprised $126 billion, derived from the 3 major segments:
- More personal computing – $46 billion in 2019 (revenue derived from the sale of OS, devices and gaming offering)
- Intelligent cloud – $39 billion (sale of private, public and hybrid server products and cloud services)
- Productivity and business processes – $41 billion (sale of Office subscriptions, LinkedIn revenues and cloud enterprise solutions (CRM and ERP).
Trade Microsoft - MSFT CFD
Microsoft share price forecast: MSFT stock – buy or sell
Historically, the Microsoft stock price record high is 141.34, which is only 6% higher than the current share price. The latest closing price for Microsoft shares is 133.39 as of 23 August 2019.
According to the most recent Microsoft share price prediction offering 12-month price forecast, Microsoft stock will grow up to +14.87% from its latest price. Analysts suggest a steady “buy” rating for their MSFT stock outlook, which makes it a good long-term investment so far. Follow the latest Microsoft news and conduct your own technical and fundamental analysis to decide whether to buy or sell Microsoft shares and include them into your investment portfolio.
Photo: VDB Photos
