Microsoft, 8 Quarters of Betat

Macro Perspectives: Wed 27 Jan 2021

Microsoft reported earnings after the close yesterday - beating on earnings and revenues, for the eighth consecutive quarter.

It wasn't too long ago that MSFT was a tech giant that was believed to be past its prime. If you bought the stock at the top in 1999, you were underwater for 16 years. If you bought it in 2000 for half price, it was dead money for 13 years (flat line). In April of 2013, Business Insider wrote a story titled: "Microsoft Could Be Obsolete By 2017."

So what changed?

The same month Business Insider wrote that article, a guy named Jeff Ubben took a $2 billion stake in Microsoft.

By September Ubben had secured a board seat and he went to work, pushing for stock buybacks and a new strategy. He pushed out the CEO Steve Balmer and replaced him with Satya Nadella - who was running the Microsoft cloud business - with a mandate to turn Microsoft into a cloud computing company.

He has done it.

The stock has now gone up more than 8-fold in seven years. Today, instead of obsolescence, it's a $1.85 trillion-dollar company, thanks to Ubben. It may just be the most extraordinary activist campaign, if not investment and strategic turnaround, of all-time.