Microsoft revenue beats estimates as Covid-19 crisis boosts cloud business

Microsoft benefited from strong demand for its Teams collaboration software, which now has 75 million users.

Microsoft Corp on Wednesday beat Wall Street sales and profit expectations, powered by sharp demand for its Teams chat and online meeting app and Xbox gaming services as the world shifted to working and playing from home because of the novel coronavirus pandemic.

The company's shares, up over 12 per cent this year, rose about 5 per cent in extended trading.

The results reflect Chief Executive Satya Nadella's focus over his six-year tenure on cloud computing, in which companies tap Microsoft's data centres for computing power - a growing business dominated by Amazon.com Inc's Amazon Web Services.

For the fiscal fourth quarter, Microsoft gave business-unit forecasts that were below analyst estimates, predicting tough times for LinkedIn and some small-business software sales.

"Ultimately, Microsoft is not immune from what is going on broadly in the world in terms of GDP growth," Nadella said on a conference call with investors.

But results benefited from sales of its Windows operating system and Surface hardware devices as people upgraded personal computers to work or study from home. Microsoft also cited all-time-high engagement on its Xbox Live gaming service, with 19 million active users.

Flipkart India's most preferred workplace; Amazon, Oyo come next: LinkedIn

Internet companies dominate the top 10 spots in LinkedIn's fourth edition of the '2019 Top Companies' list for India.

Walmart-owned Flipkart is the most preferred workplace in India, followed by Amazon and Oyo in the second and third places, respectively, according to a list compiled by professional social media network LinkedIn.

Internet companies dominate the top 10 spots in LinkedIn's fourth edition of the '2019 Top Companies' list for India.

IT giant Tata Consultancy Services (TCS) made its debut at the seventh place, new entrants and homegrown internet and consumer services companies Swiggy and Zomato were ranked sixth and eighth, respectively.

Uber, another new entrant, took the fifth spot, while, One97 Communications was at the fourth rank and Oil and Energy conglomerate Reliance Industries was at the 10th place.

Others on the list include consulting firm Boston Consulting Group (BCG) at 13th, Yes Bank (14), IBM (15), Daimler AG (16), Freshworks (17), Accenture (18), Ola (19), ICICI Bank (20), PwC India (21), KPMG India (22), Larsen & Toubro (23), Oracle (24), and Qualcomm (25).

"This year, half the companies are new entrants on the list, including IT giants such as TCS and IBM that showcase the changing job and hiring landscape," said LinkedIn India Managing Editor Adith Charlie.

Charlie further said that "the presence of more blue chip Indian companies such as Larsen & Toubro and Reliance Industries, among others emphasises the fact that these large firms are getting better at attracting millennials employees".

The report further noted that majority of companies on the list made maximum new hiring for engineering jobs followed by operations and business development.

The list analysed billions of data points generated by LinkedIn's over 610 million members around the world to come up with a blended score used to rank the winners in each geography.

LinkedIn ranked the companies based on four criteria -- interest in the company, engagement with employees, job demand and employee retention.

Business Standard

App boom: Why 2019 could be the year of another technology bubble crash

It is only a matter of time before the app bubble bursts. Falling shares of the big tech companies is indicative of markets losing faith in even the established tech corps to achieve their forecasts.

When the dot-com bubble burst in 2000 it sent significant numbers of businesses to the wall. Investment banks had been encouraging enormous investment in dot-com ventures by launching Initial Public Offers (IPOs) allowing investors and entrepreneurs to cash in on vast fortunes by selling off shares in their companies.

Most of the dot-coms which listed on stock exchanges had done little more than consume vast amounts of investor cash and showed little prospect of achieving a profit. Traditional metrics of performance were overlooked and big spending was seen as a sign of rapid progress.

The cash burn was to build branding and create network effects – where something gains more value the more people use it. These are the main driver of platform businesses. With Amazon, for example, the more suppliers the greater benefit to potential customers and vice versa. Together, this would build the foundation for future profits on the assumption that the underlying business case was sound. Most were not – and yet almost any idea attracted large amounts of funding.

Fast forward 19 years and, following a similar “app” boom, investment banks are bringing forward IPOs as they foresee volatile market conditions arriving later in the year. Ride-hailing apps Uber and Lyft, respectively valued by investment banks at US$120 billion and US$15 billion, are to be placed in early 2019 to beat the collapse. Both are loss makers – with Uber’s losses approaching US$4 billion in 2018 after a US$4.5 billion loss in 2017. Traditional metrics have been ignored and user growth taken as a proxy for future profitability. But this requires an enormous leap of faith.

The NASDAQ Composite index from 1994 to 2005, showing the peak in early 2000 that coincides with the dot-com bust. Lalala666 via Wikimedia Commons

Uber, like many, has been able to tap readily available funds and has raised more than US$22 billion from investors so far. The problem with being able to raise funds so readily is that it discourages focus and efficiency. Uber is not only developing the ride hailing model but also bike sharing, takeaway food delivery and autonomous vehicles. The latter is also being developed by most of the major car manufacturers, as well as Google.

Snap Inc, owner of social media app Snapchat, is also on the rocks, as it is rapidly running out of funds – despite its US$24 billion listing in 2017. The shareholders are powerless to intervene, as only founder shares have voting rights. LinkedIn is still losing money after its US$26 billion purchase by Microsoft.

Twitter has just made a small profit for the first time, following adoption as US president Donald Trump’s main channel for US policy announcements.

Business Standard