What's going on?
“Just” $40 billion separates the values of Apple and Microsoft – the world’s largest and second-largest public companies. So here’s hoping Microsoft’s better-than-expected quarterly update on Wednesday will help it become fitter, happier, and more productive…
What does this mean?
Microsoft’s revenue and profit was higher than investors had forecast, and the sky was the limit for the company’s cloud computing segment, which continued its breakneck ascent (tweet this). That might in part be thanks to Microsoft’s newly announced agreement with SAP, Europe’s largest tech company: the German giant’s customers will ctrl-shift onto Microsoft’s cloud computing platform, bolting on sales of SAP’s cloud tools to boot. And if Microsoft can beat market-leader Amazon to win a $10 billion US government cloud computing contract, its cloud business may yet go stratospheric.
Why should I care?
For markets: Shaping investors’ sentiment.
Many global investors take their buying and selling cues from the US stock market, since it’s the biggest in the world. And with Microsoft representing 4% of the US market, the software behemoth has a major influence over the direction of the country’s stocks overall. Investors initially buying Microsoft’s stock after its update only pushed the trillion-dollar company’s share price slightly higher. That momentum may not be enough to help Microsoft overtake Apple in the stock market charts, but might still help lift stocks elsewhere on Thursday.
Zooming out: Tech saves “tech”.
On Wednesday, recently fallen “tech” angel WeWork struck a deal with its largest investor, SoftBank, giving it an 80% stake in the company in order to avoid running out of money next week. The company was valued at $47 billion shortly before its attempted initial public offering in September, but it’s now worth closer to $8 billion. The company’s founder – who now appears to have few friends among professional investors – is set to step down as CEO, but not without a $1 billion payday that’d make Mr Nawana green with envy.