The purchase of github doesn't make immediate financial sense to me. This article posted a reason - to stave off Windows decline. While it is plausible, I still don't see it.
When I think of Ballmer, the first word that comes mind is "developers" (it's also the second... and the third...)
Just have to point out how fucking expensive develope mindshare is then :)
But seriously, from a business perspective buy GitHub (a company which gobbled up lots of VS money without a good business model) the acquisition doesn't makes any sense.
If Microsoft can integrate Azure and GitHub to make it easier for developers to deploy and run their code in the cloud, then that means more Azure customers.
This likely means that GCP and AWS integrations will take second place.
They had a joint presentation at BUILD 2018, how to have a full CI/CD pipeline in Azure, with code taken from Github.
Now in retrospective, maybe the talks were already ongoing.
Heroku for example is already pretty well integrated with GitHub, and they didn't have to buy anything.
This acquisition reminds me of the Minecraft acquisition. It did not make financial sense to me either. If Nadella keeps this up, he will eventually have issues with shareholders.
This time, really, the profits don’t matter: Microsoft is paying by issuing about 73 million new shares of stock, which cost it nothing. (It’s a tiny dilution, given the company’s 7.7 billion shares outstanding; what’s more, the share price rose on the news, which means that existing shareholders are happy to be diluted.)
https://slate.com/business/2018/06/microsoft-github-deal-why...
The new stock is about 1% of the total number of shares outstanding. Thier total market cap is around. $785 billion. If they did a stock buyback to cancel the dilution it would be 7.85 billion.
My numbers are rounded - the new stock is actually less than 1% and the market cap as of right now is a little less than 785 billion so around 7 billion is more accurate.
By the way, I said they will buy back stock in the next six months but it will be in the six months following the closing of the transaction (which is expected to take place by the end of the year). I've edited my previous comment slightly.
Further, noting the current day price change is always the basis for countless nonsense articles. The shares haven't been diluted yet -- not until the deal closes later in the year -- and a temporary blip one way or another is close to meaningless.
That money is very real, and there is nothing free about it.
"The market can stay irrational longer than you can stay solvent".
To put it another way, simply doing the SAP and squeezing Windows + Office would have netted a much more profitable business than everything Microsoft has been doing.
[As an aside, Microsoft's continuing tendency to group success with losers, shuffling them around to opaque the numbers, is something that sees far less skepticism than it should. We saw this with Windows Mobile cum Phone where they tried to put on the face of success for as long as possible]
Microsoft was traditionally a very high profit margin company, and their software offerings still are. Azure might sound good to make them seem like they're still with it, but it is deadly long term (massive capital expenses, fast depreciation, and very low margins).