Microsoft is wrongly viewed by many as a consumer technology play.
With 67% of gross profit from corporates: Microsoft is an enterprise business Cloud, Windows 8, now Surface Pro 3: its all about supporting enterprise level businesses where interconnectedness increasingly matters.
Insync Funds Management likes Microsoft enough to buy the stock but for different reasons to many other investors.]
“It’s a robust business and we like the new CEO’s approach to partnering with other platforms. What we like best is that 67% of Microsoft’s gross margin comes from its corporate customers,” Nitesh Patel, Portfolio Manager, Insync Funds Management.
“That means more surety in earnings as corporate customers often have long-term support contracts in place and are less concerned by the fluid nature of consumer trends.”
“Cloud-based applications/Azure, Windows 8 (soon Windows 10) and now Surface Pro 3 which combines a tablet with a desk top PC are attractive solutions to corporates for functional reasons. These enterprise level businesses demand interconnectedness across mobile and mainstream needs.”
“Retail customers desire these same benefits and this gives an extra boost to sales at present. We think that individual investors should look at the enduring strengths of Microsoft’s key corporate market first before seeing it as a retail consumer technology stock,” Nitesh Patel, Portfolio Manager, Insync Funds Management.”
Originally published 20 November 2014.