Microsoft Fiscal Year Results, 18% Revenue Growth, 41% Growth in Azure

Annual revenue $331bn (+18%), MS Cloud $214bn (+27%), Azure $100bn+ (+41%). Models and copilots are a big future focus.

Microsoft Offloads Game Studios (including Double Fine, Compulsion)

Microsoft's Xbox division is undergoing a major restructure, starting with dispensing game studios currently under its aegis.  

Already in 2024, Xbox cut more than 2000 positions and closed four studios, before acquiring Activision-Blizzard, makers of Call of Duty. 

The hardware cost pressures from AI have also made Xbox hardware development challenging. 1600 roles have now been eliminated at Xbox in the latest round of cuts.

Asha Sharma, Xbox's new Chief Executive, warned of major changes back in June.  She is the former Chief Operating Officer of Instacart.

On the studios side, Double Fine, acquired in 2019, moves back to independent ownership. It has declared its thanks for "seven great years together" as part of Microsoft. Compulsion also leaves Microsoft. 

Both firms retain their original IP.

Microsoft Q3 Earnings beat Expectations

Investors are keen to see progress on cloud growth, AI and capex trends. Analysts predicted 10% rise in earnings per share from last year to $3.22 with Azure and AI related segments forecast to drive growth. Actual numbers came out at $3.46 per share exceeding analyst expectations. Cloud and AI drove the growth, as Microsoft reported $70.1bn in revenue for the quarter ending in March, a rise of 13% from last year's number. Net income came in at $25.8bn (a rise of 18%). Azure revenues rose 33% from last year.

Microsoft Quarterly Earnings to Fall Short of Analyst Estimates

So spake Microsoft finance chief Amy Hood (Duke University economics graduate and Harvard MBA, ex Goldman Sachs Investment Banking Associate), and the stock slid 6.2%. Goldman Sachs described the company as "well positioned" to benefit from AI adoption. Mizuho said Microsoft was one of its top picks for 2025.

Maginative is an AI News Platform

Maginative is an AI news platform bringing the scoop on OpenAI, Google, Anthropic, Microsoft, Meta, NVIDIA and more.

Musk raises $6bn for xAI

 xAI has raised $6n from investors including Andreesen Horowitz to bring its “first products to market, build advanced infrastructure, and accelerate the research and development of future technologies.” Some of this money will go into data centers with some expensive GPUs. Founder Elon Musk is also suing its competitor OpenAI for its partnership with Microsoft citing an abandonment of its mission to benefit humanity.

Clearlake and Insight to Acquire Alteryx for $4.4bn

Clearlake Capital Group LP with Insight Partners (co-founded by Colorado-based Twitter investor Jerry Murdock) have agreed to acquire Irvine, CA-based Alteryx (NYSE:AYX), a cloud analytics platform company, in a $4.4bn definitive agreement. Regulatory and stockholder approvals are required.  Alteryx will then become a privately held portfolio company of Clearlake and Insight.

Competitors of Alteryx include Tableau, DataDog and even Microsoft Power BI. 

DataDog has more of a niche around cloud infrastructure metrics and supports AWS, Azure, GCP, RedHat OpenShift and VMWare amongst others and raised substantial capital in a Series D funding round led by ICONIQ Capital.

Bill Gates Steps Down from Microsoft's Board

Bill Gates will focus on health and development, education and tackling climate change. He steps away from Microsoft's board and Berkshire Hathaway, having already stepped back from day to day operations at Microsoft in 2008.

Graphcore Gifted $200m in Series D Round

Bristol, UK based chipmaker Graphcore has received $200m in Series D funding from the likes of Microsoft and BMW (iVentures arm, based in Mountain View, San Francisco and Munich).

"Patient capital" provider, Sofina was also involved (whose current Chairman is Sir David Verey, CBE, ex Lazard). This investment values the company at $1.7bn. (Note that Sequoia invested $50m at Series C).

Founders are Nigel Toon and Simon Knowles.

Nigel has been CEO of two VC-backed companies before founding Graphcore, one of which was XMOS in which Graphcore was incubated prior to spin-out. Simon is co-founder and CTO, and has founded and exited two fabless semiconductor companies, Element14 and Icera for a combined value of $1bn. Prior to that he headed microprocessor design at ST Micro.

CNNs (convolutional) and RNNs (recurrent neural networks) are among the skills being hired for in their new round of expansion as well as knowledge of PyTorch and Horovod. Horovod uses MPI (Message Passing Interface) to distribute machine learning load across multiple GPUs.

RNNs have been used to analyze temporal dynamical behaviour such as handwriting recognition and speech recognition.

Amazon Markets ACK to OEMS Targeting Home Automation

Amazon is marketing a board with chip and antenna to OEMs looking to integrate with Alexa in the home automation space. They call it the ACK. The cost of the chip will be only a few dollars. This puts Amazon in the driving seat of home automation, alongside the likes of Google (which purchased Nest Labs in 2014), Apple and Microsoft. Hamilton Beach and Proctor and Gamble are partnering with Amazon on this. The value of Amazon's offering is not in the chips themselves, but in binding consumers to their platform, and owning the data generated off of it.

Microsoft Grabs Github for $7.5bn

Github is used by more than 28 million developers representing 1.8m organizations. The purchase price values each user at just under $270 each. The business will now be led by Nat Friedman, founder of Xamarin, another Microsoft (2016) acquisition.

"Always Keep Learning" - Useful Advice from Microsoft's new CEO

Microsoft's new CEO, Satya Nadella, hails from Hyderabad, India (the capital of Andhra Pradesh) and studied at the University of Mangalore (or Mangalapuram in Malayalam, which is close to the Arabian Sea) where he got his Bachelors in Electrical Engineering.

He has been at Microsoft since 1992. The full form of his first name is Satyanarayana.

As Microsoft's third CEO after Bill Gates and Steve Ballmer, he will be paid $1.2m a year, plus be eligible for a cash bonus of up to $3.6m. In an interview with the Deccan Chronicle, he shared some insights into his work philosophy: "You stop doing useful things if you don't learn".

Welcome to the Vertically Integrated World of Windows Phone! Microsoft Buys Up Nokia's Handset Business and Patents for 5.4 billion Euros; Elop to run Devices

A Confluence of Factors Led to this Deal - Starting with the Lumia Partnership

Nokia's market share has been declining and Microsoft wants expansion in the mobile space, and for this Microsoft is willing to pay over five billion euro in cash. 

This confluence of factors has caused Carolina Milanesi at Gartner to pronounce that the deal came at "the right time".

Microsoft and Nokia have had a mobile partnership over the last two and a half years in the form of the Nokia Lumia (which uses the Windows Phone operating system).

Key People Mentioned in the Deal Rhetoric:

Here is a multinational team responsible for managing the Microsoft+Nokia mobile initiative.

• Steve Ballmer (American) - has come on record that he does not intend any major geographic shifts in terms of moving people and teams. Well done Steve for engineering this deal and also reassuring employees by reducing potentially disruptive changes during the transition!
• Stephen Elop (Canadian), a Microsoft alumnus, and head of Nokia, now returns to Microsoft and will take charge of the "Devices" unit that includes Microsoft Surface.  He has a Bachelors in Computing and a Doctor of Laws from McMaster University, Hamilton, Ontario, Canada. Good luck Stephen in running the Devices division of Microsoft!
• Timo Toikannen (Finnish), from the Nokia side, will continue to lead the Mobile Phones team. He has a Master of Law from the University of Helsinki and King's College London and established legal operations for Nokia's mobile business in Asia-Pacific. He joined Nokia in 1995 and then joined the leadership team from July 2012, more than 15 years later.

Microsoft Ready to Eat Dell

Michael Dell, Microsoft and Silver Lake are preparing to re-take Dell for $24.4bn. This is a huge transaction in the "take-private" deal category.

John Brennan is an MD with Silver Lake in Menlo Park (San Mateo County, California). Christian Lucas (former Head of European Technology at Morgan Stanley) is an MD with Silver Lake in London.

Microsoft to Buy Skype for $8.5bn

Ballmer's Big Sale

Behemoth Steve Ballmer has sold $1.3 billion worth of shares in Microsoft and plans to sell more by year-end.

Microsoft Merges Multiple Times but Deals Lack Gusto of Google

In 2000, Microsoft acquired Visio (now integrated into MS Office), and 2001 Great Plains Software (an accounting solutions provider, whose product is now named Microsoft Dynamics GP).

More recently (October 2008) MS acq'ed Greenfield Online Inc for $17.50 a share. Greenfield is a provider of online survey solutions. In Aug 2007, it made a more heavyweight acquisition, Internet advertising platform purveyor AQuantive for $66.50 a share. AQuantive has now been rebranded Microsoft Advertising.

Cookie Jar accounting

In Jun02, MSFT was accused by the SEC of using "cookie jar" accounting, a tactic whereby revenues are shifted through reserve accounts. The SEC said between 1995 and 1998, MSFT used seven such accounts, each account containing between $200m-$900m. MSFT shares were down 1.2%.
CJA is also known as "voodoo" accounting. Utah-based iMergent lost coverage from major brokerage houses through its use of "CJ" accounting, as seekingalpha neatly describes.

Is Paulson the Greatest Trader Ever?

Hedge fund manager John Paulson who made $3.7bn betting against sub-prime (and UK banks like RBOS), has cut his short position in Barclays, the day before Abu Dhabi investment corporation (IPIC) pushed the share price down 5% after offloading 1.3bn shares (IPIC wants to maintain a strategic relationship with Barclays however). Paulson's position was cut on 2 June from 1.17 percent to below 0.25% (threshold for disclosure).

Paulson is thought to have lost £100m by holding his short position from November until June09 as Barclays shares have rocketed five-fold, since hitting 51p low in January. He has a property in the Hamptons.

Paulson's fame came from recognising there was a housing bubble in the United States and ACTING ON IT in 2006 while playing with spreadsheets. He made $1.25bn in a single morning from a five-point fall in the markets (late 2007). Initally, Paulson and his aide Paolo Pelligrini looked at buying puts on the S&P but they were just too darn expensive. So they started buying CDS, insurance on debt, which were very cheap. Paulson has since become the subject of a book "The Greatest Trade Ever" by Gregory Zuckerman of the WSJ.

In other news, Intel acquired embedded software provider WindRiver, a synergistic union ($11.50 per share in cash).

And the FSA banned CFD broker Blue Index who were based at St Dunstan's Hill near Old Billingsgate Market.

BoA drops 13% Thursday, Thain Leaves Merrills, Tech Ups and Downs, KBC Bailout

Ex-Merrill chief John Thain is ejected from Bank of America.

mba(thain,hbs).

BoA's general counsel Brian Moynihan replaces Thain. ML announced a loss of $15.3 billion in the fourth quarter, or $9.62 a share.

Microsoft, the maniacal operating system giant, announced it was cutting 5,000 employees indicating few companies are immune to recession. Fiscal discipline is necessary for all technology companies in this climate.

Commented one investment firm manager, "it's tough to do well in this environment, and if a company succeeds, it's a huge compliment to management" adding "Microsoft has turned into the big old sluggish company that IBM used to be".

KBC has been bailed out to the tune of €2 billion from the Flemish government (Flemish is Dutch as spoken in Belgium) fueling a rebound in its shares (adding to the existing bailout paid in October). KBC announced it will concentrate its activities on home markets, reduce costs and market risk. It would scale down its derivatives business.