Microsoft Banking On Populist Groundswell To Lift Enterprise Business
Microsoft (NASDAQ: MSFT) is set to announce its fiscal Q2 2014 financial results after the market closes Thursday, January 23 (today). The Wall Street consensus expectation is for Microsoft to post earnings of 67 cents a share on a top line of $23.5 billion.
Whether or not Microsoft misses or hits the estimate, the stock is unlikely to experience major swings. Most investors are more concerned on who will succeed CEO Steve Ballmer, and more notably, the strategies that Microsoft will use to navigate the current competitive tech market.
Meanwhile, Microsoft has made a move that has the potential to lift its enterprise business. This move will allow it to maximize its strength in the enterprise market at a time when the consumer market presents continued uncertainty. Microsoft General Counsel Brad Smith in a Wednesday interview with the Financial Times at the World Economic Forum in Davos, Switzerland, said that Microsoft will let foreign customers to store data overseas.
Riding On The Anti-Spying Wave
Microsoft’s new position comes at a time when the populist call is that of anti-espionage. Technology companies have had issues reassuring customers over the safety of their data following revelations by former NSA contractor Edward Snowden regarding the extent of NSA spying.
Smith said that while other companies may stand opposed to the idea of letting customers store their data overseas, Microsoft would reconsider its stance following the Snowden incident. “We have never turned over to any government any information that belongs to another business, another government or an NGO,” he stressed. “It is not our right, no one elected us, to simply decide to turn over someone’s information,” he added.
As we discussed (in part) in a separate story on BlackBerry, the ‘Snowden effect’ is informing a lot of decisions by tech companies. Basically, a new wave of courageous probes into how private information is treated is sweeping through. In view of this, it is in the best interest of tech companies to display their commitment to protecting private data from the prying eyes of the government.
However, Microsoft’s change of strategy with its enterprise clients will only provide a temporary lift for its enterprise business.
Investors should instead look at today’s earnings and thrash out sales figures for Microsoft powered tablets, both the Surface 2 and Surface 2 Pro. These figures will be indicative of the extent to which enterprise clients are accommodating of the Windows platform.
Over the holiday season, both tablets reportedly sold out at Microsoft’s online store, Walmart’s online store and a number of Best Buys. Today’s earnings may reveal whether this was artificially created shortage or an indication that Microsoft is getting back on track despite the continued freefall in PC sales.
Disclosure: Author represents that he has no position in any stocks mentioned in this article at the time this article was submitted