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Microsoft wins Yahoo Finance's Company of the Year award.
- Welcome back to "Yahoo Finance Live" on this Monday morning. I'm Brian Sozzi, joined by Julie Hyman and Brian Cheung. After another big year of growth that has sent its stock price up 45%, Microsoft has won Yahoo Finance's coveted Company of the Year Award. Yahoo Finance Tech Editor, Dan Howley, is here with the details. Dan, pop those bottles.
DAN HOWLEY: That's right, Brian, there are numerous reasons for Microsoft to be Company Year. Not just because of its stock growth, or the fact that across the $2 trillion mark as far as market cap, but it's revenue as well as the way it's revolutionizing cloud computing. So we just want to give you a further example, take a look.
Microsoft has had a stunning year. After nearly a half century in business, the tech giant crashed through the $2 trillion market cap mark in June, joining an exclusive club that includes Apple, and for a brief moment, Google Parent, Alphabet. As of December 2nd, Microsoft was worth a staggering $2.5 trillion. Over the last 52 weeks Microsoft's stock price has skyrocketed 45%, easily outpacing the broader S&P 500, which rose 21% over that same period of time. The company's financial reports have been just as impressive as its market cap.
Over the last 12 months, the software giant has reported a stunning 176 billion in revenue, a year-over-year increase of nearly 20%.
BRENT THILL: This company had some of the best growth rates we've seen in quite some time. And I think the only concern for Microsoft next year is, when you're growing close to 20% can you continue that at a multi-hundred billion run rate, and that's a difficult task.
- But Microsoft has always been a cash cow because it operates in the high margin software sector. Founded by Bill Gates and Paul Allen in 1975, Microsoft's Windows would become the most widely used operating system in the world. And Gates would hold onto his CEO role for decades, until he stepped aside for Steve Ballmer, who took the reins in 2000. The duo saw Microsoft through a number of major product releases and challenges, the most significant of which was the company's antitrust battle with the Justice Department that ran until 2002. This distraction, along with a series of miscues, meant the company spent years fighting for relevance among its big tech peers.
SCOTT SNYDER: Businesses, over time, become married to their current business models. We like to say cash cows drink their own milk, and in this case, Microsoft had harvested that. But also they were becoming viewed as really a less relevant firm and the tech space because they weren't reinventing itself.
- But in 2010, the company launched Azure, a version of Windows powered by the cloud, and it hasn't looked back. Today, under CEO Satya Nadella, the 46-year-old company is branching out and thriving in New businesses, including cloud computing, connectivity apps like Teams, and social apps like LinkedIn.
DAN ROMANOFF: I think Nadella is really one of the elite level CEOs that I've seen in 20 years of covering stocks. Just this emphasis on Azure really worked out to be one of the best strategic decisions the company's made probably outside of the development of Windows, obviously, in Office. it's been the key strategic decision they've made through the course of their history.
- Equally remarkable is that Microsoft has flourished, while avoiding the public backlash or antitrust scrutiny its big tech counterparts Amazon, Facebook, Google, and Apple have faced. It's for those reasons and more that Yahoo Finance has named Microsoft its Company of the Year for 2021.
DAN HOWLEY: So as you can see guys, Microsoft has plenty of reasons to be named to this position. Obviously, the idea is that it continues to grow based on Azure, but not just on Azure. The fact that it's continuing to grow in other areas such as communication tools with Teams, something that they've been pushing heavily, and they've jumping into the metaverse with their Mesh Teams software. So obviously, that is another reason for them to potentially see growth in the future, and then of course, their Xbox gaming franchise as well. Back to you guys.
- Hey, Dan, it's Julie. I think one of the amazing things as we talk about Microsoft too is not just that we have all these various growth areas-- these diversified growth areas-- but that Microsoft is already so big, and managing to grow at this pace. Typically, you get the kind of conventional wisdom that once a company gets to a certain size that it cannot necessarily grow at that same pace. Especially a company that we think of like Microsoft, that has I think it's fair to say, somewhat still a bit of a stodgy reputation.
DAN HOWLEY: Yeah. And that's something that reputation wise, something that they were looking to change under Satya Nadella. Really, one of the issues that I think they had to address was the fact that they were so insular as far as the kind of software they used and who they worked with. You wouldn't be able to find Microsoft software on devices that were competing with Microsoft's own products. But now, Microsoft's software is on iOS, it's on Mac, it's on Android, you can use it through Chrome. And not only that, but they have a smartphone that runs Android.
So they have an Android smartphone that has Microsoft overlays on it so they really diversified in that respect. And it's really the fact that they continue to be a huge provider for operating systems. Obviously, Windows 11 was released this year, but they also have Office. And then, on top of that, they have the new Azure capabilities so they're helping to migrate some of their users from the traditional single SKU purchase to that recurring revenue model. And then, on top of that, just to point out that with the addition of Azure, they have a few of the cloud versions of Office as well.
So it really is an incredible story for Microsoft and for the industry in general. And just to see a company like this really grow after being such a behemoth is something that's really worthy of pointing out.
- Well, let the record show Dan, I voted for Crocs as Company of the Year, but clearly, I did not win that debate. How do we choose Company of the Year, Dan?
DAN HOWLEY: We really go around the office and see who exactly thinks what company deserves it, based on not just the numbers-- although we take the numbers into heavy account-- but what they've managed to do throughout the year and how they've managed to do it. So Microsoft having the ability to not only, as Julie said, be massive already but grow from there, I think is something that was really worth pointing out. And as I said, really transforming computing with the cloud industry. Now, it's worth pointing out Amazon is the largest cloud computing company in the world, but Microsoft is gaining on them. They're in the second place everyone, else is basically just playing catch up to those two, though.
- We'll have much more on our Yahoo Finance Company of the Year, which is Microsoft. Dan Howley, thanks so much.