ValueAct Still Believes Strongly in Microsoft Corporation (MSFT): Here’s Why

Perhaps more importantly, these businesses were in no way reliant on PCs or continuing PC sales, and their revenue continued to grow even as PC sales slumped, despite the perception that Microsoft was a company heavy reliant on a successfully PC ecosystem.

Microsoft has demonstrated an ability to drive new and premium products into the enterprise customer base and we believe there are plenty of opportunities for them to continue to drive growth. These businesses have already shown a de-coupling from the PC cycle and Microsoft is accelerating the trend with the subscription based pricing of Office 365. Similar to Adobe’s success with “Creative Cloud,” we see the potential for significant migration of Exchange / Office 365 to the cloud, with pricing upside and positive implications for the way investors perceive and value Microsoft.

By late summer 2013, Microsoft Corporation (NASDAQ:MSFT) was well on their way to unlocking the potential ValueAct saw in them, as well as changing the perception of their business amongst other investors. Steve Ballmer dramatically announced his decision to retire during the summer (though this was not related to any pressure from ValueAct to do so, at least not officially), and ValueAct President Mason Morfit was granted a seat on Microsoft’s board some days later, one of 10 at the time.