Microsoft shares flirt with dotcom-boom levels on iPad app report

March 25, 2014 Leave a comment

Microsoft shares flirt with dotcom-boom levels on iPad app report
4:41pm EDT
By Soham Chatterjee
(Reuters) – Microsoft Corp’s shares scaled levels last seen in the dotcom boom following reports that the company plans to unveil an iPad version of its Office software suite, potentially generating billions of dollars in revenue.

Reuters reported late on Monday that new Microsoft Chief Executive Satya Nadella would unveil the iPad app at an event on March 27.
The event will be Nadella’s first major public appearance since his appointment last month.
Microsoft shares rose as much as 5 percent to $39.90 on Tuesday, adding $15 billion to the company’s market value. At that price, the stock was up about 10 percent since the announcement of Nadella’s appointment on February 4. The shares last touched $40 in July 2000.
Microsoft has had iPad and iPhone versions of Office primed for several months now, sources told Reuters, but the company has dallied on their release due to internal divisions, among other things.
Analysts said the lack of an Office version for the iPad may have robbed Microsoft of billions of dollars in revenue. (Reuters Insider: reut.rs/1gC77rr)
“We estimate that if 10 percent of the iPad install base were to subscribe to Office then this could add 15 million subscribers and generate $1.1 billion to $1.5 billion in consumer Office subscription revenue per year,” Bernstein Research analyst Mark Moerdler said in a note on Tuesday.
Investors have for years urged Microsoft to adapt Office, its most profitable product, for iPhones and iPads and devices using Google Inc’s Android software rather than shackling it to Windows as PC sales decline.
Microsoft’s productivity tools remain the industry standard in offices, but America’s employees are increasingly using smartphone and tablets to supplement their work.
Tired of waiting for Office to be optimized for their touchscreen devices, a growing contingent of younger companies are turning to cheaper touch-friendly apps that can perform word processing and other tasks in the cloud.
Barclays analyst Raimo Lenschow said the plan to launch the iPad app would signal that Microsoft is moving towards a more serious cross-platform strategy.
Bernstein’s Moerdler said he did not believe that the app would have any significant positive or negative impact on Microsoft’s Windows franchise as most corporate customers use Windows.
Microsoft already offers Office Online on its Windows smartphones and as a free Web-based version.
Google Inc has been making inroads into Microsoft’s Office software business with its free Google Drive application, which includes spreadsheets, presentation and word-processing tools.
Last year, Apple offered free updates for life on its iWork business software, which includes rival applications to Microsoft’s Excel, Word and PowerPoint, for MacBooks, Mac computers and iPad.
Apple also said today it would offer an iPad 4 tablet in place of the mid-range iPad 2 at the same price.
Tablets based on Apple’s iOS platform held 36 percent share of the market in 2013, trailing those based on Google’s Android software that had 62 percent share, according to research firm Gartner.
Microsoft shares were trading up 4 percent at $39.60 in midday trading on the Nasdaq.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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