Does Microsoft remain the leader in corporate IT?
Software manufacturer Microsoft Corp. (MSFT) remains resilient despite economic uncertainty. In the short term, the company may slow down growth in some business segments, but in the long time, it can remain one of the leaders in the software and cloud computing market. Microsoft’s results for the fourth quarter were somewhat worse than what was on Wall Street, but the company presented several positive updates simultaneously. Unlike smaller tech companies, whose shares have fallen heavily in the past few months, tech giants such as Microsoft have demonstrated comparative resilience.
One of the reasons is Microsoft’s ability to generate significant cash flow even in challenging economic conditions. In the fiscal year 2022, the company had $105 billion in cash and equivalents on its balance sheet. It is worth noting that Microsoft operates in a highly competitive environment. For example, its cloud business competes with Amazon, and Alphabet forces the company to look for new opportunities for growth and increase its competitiveness. A few weeks ago, Microsoft announced a new service to accelerate the implementation of Oracle workloads in the Microsoft Azure cloud.
Thus, the company’s cloud platform has become unique since it is the only provider of public cloud services with direct access to databases running in Oracle Cloud. Microsoft continues to invest in acquisitions and new technologies. In the past quarter, expenses increased by 14% year-on-year. However, judging by the company’s results, they are paying off. For example, the annual revenue growth of the LinkedIn application was 26%, and the total revenue from Microsoft’s intelligent cloud business reached $21 billion due to the flagship Azure product, which grew by 40% year-on-year. In addition, Microsoft has recently acquired several cybersecurity players, including CloudKnox Security and RiskIQ.
As in the case of cloud computing, Microsoft faces stiff competition from Amazon and Alphabet in cybersecurity. However, cloud computing and cybersecurity are huge markets that leave room for many players. Note that Microsoft’s cybersecurity business has grown by 40% year-on-year. Thus, Microsoft maintains leadership positions in many business areas and expands the range of services, covering an increasingly targeted audience. The company holds a strong balance sheet, profitability, and a high degree of penetration into growing markets.
