Microsoft: move to subscription model makes for ‘sticky’ revenue

Peter Wilmshurst

Back in 2006 when we first bought Microsoft, the market was concerned about the future of the company’s consumer division – even though it represented only five percent of total sales. We saw great long-term potential for Microsoft to transition its enterprise software business to a subscription-based model, which would generate more predictable revenues.

What makes Microsoft attractive today?

  • A successful transition to the cloud continues, and Microsoft’s commercial cloud business now makes up almost 20% of total revenues (up 56% year on year).
  • Microsoft continues to aggressively return cash to shareholders through buybacks and dividends.

Peter Wilmshurst

Peter Wilmshurst is the portfolio manager of ASX listed Templeton Global Growth Fund (ASX: TGG) and an executive vice president in the Templeton Global Equity Group with research responsibility for banks in Europe, and Asian telecommunications...

Expertise

Comments

Please sign in to comment on this wire.