Microsoft more valuable than Google, but still trails Amazon

Washington. Microsoft surpassed Google’s parent company Alphabet in market value Tuesday, becoming the third most valuable company in the world.
At the end of trading Wednesday, Microsoft’s market value was $760 billion, holding off Google’s parent company Alphabet, whose market value was $746 billion. Only Apple and Amazon.com are worth more, at $922 billion and $788 billion, respectively.

The ballooning valuations have fuelled speculation as to which US tech company will be the first to reach a $1 trillion-market cap.
Microsoft’s stock price is more than double what it was when Satya Nadella became chief executive in 2014.

Analysts attribute the Nadella-era success to strategic decisions he made to compete with Amazon in the cloud storage business, an emphasis on maintaining diverse sources of revenue, and opening up what was long seen as an insular Windows ecosystem to other platforms and partnerships.
“Microsoft Azure has become a strong number-two player in the cloud wars to AWS,” Rishi Jaluria, an analyst at D.A.

Davidson, a financial services firm, said, referring to Amazon’s cloud business. For some sectors, like retail, Azure’s cloud service presents an appealing alternative to doing business with Amazon, whose e-commerce business directly competes against retailers, he said.
“The culture of the company has changed,” Jay Vleeschhouwer, the managing director of software research at Griffin Securities, said. Vleeschhouwer noted Nadella’s willingness to partner with other companies such as Adobe, and moves to reorganize Microsoft to build more internal collaboration.

Nadella’s approach, described as pragmatic, can also be seen in the decision to sell the money-losing Nokia, he said.
Compared to tech giants such as Amazon and Apple, Microsoft is less reliant on one particular business to generate income. In the company’s most recent earnings report, Microsoft disclosed that its $24.5 billion in revenue is split across three categories: about 33 percent comes from productivity services including Office and LinkedIn; 28 per cent is server products and cloud services; and 38 per cent is personal computing and gaming.

In contrast, about 86 per cent of Alphabet’s revenue comes from Google ads. And about 70 per cent of Apple’s business is selling iPhones.
“The diversity that Microsoft has is really helpful to continue that march to the trillion-dollar market cap,” Jaluria said.

“Whether it will happen before Apple or Amazon is a different story.”
While the stock prices of tech titans often track one another through dips and climbs, Microsoft’s shares began to pull away in March.

Morgan Stanley software analyst Keith Weiss told investors at the time that he expects Microsoft to reach $1 trillion in market cap within the next year, owing to the growth of its cloud storage unit and the company’s existing Office customer base that will probably upgrade to its cloud subscription service.
Alphabet and Microsoft have traded places before; the first time occurred in 2012, when Google surpassed the Redmond, Washington, company, signaling the transition from desktop-based software to Web platforms and mobile computing.

Meanwhile, a new list of the world’s most valuable brands was released early this week and China claimed two of the top spots for the first time.

Alibaba has joined the top 10, alongside Chinese tech group Tencent, as well as stalwarts such as Google (GOOGL) and Apple (AAPL).

Ranked at No. 9., Jack Ma’s Alibaba has seen its brand value nearly double to $113 billion as the e-commerce company has expanded further into fields such as mobile payments and cloud computing.

Shenzhen-based Tencent (TCEHY) broke into the annual BrandZ top 10 ranking in 2017 and has gone from strength to strength over the past year. It now holds fifth place -- behind Google, Apple, Amazon (AMZN) and Microsoft (MSFT) but above Facebook (FB) -- with a brand value of $179 billion, up 65 per cent compared to last year.

Tencent specialises in online games, apps, instant messaging services and online payments. It boasts a market capitalization of $490 billion, making it worth more than America’s most valuable bank, JPMorgan Chase (JPM).

Recently, Alibaba has been spending billions of dollars to take control of one of China’s biggest online food delivery services.

The China’s biggest e-commerce company said in April that it would buy all the outstanding shares it doesn’t already hold in Ele.me, a startup whose Chinese name roughly translates to “Hungry?” Alibaba and one of its affiliates already own 43 per cent Ele.me, according to a company statement.

The deal, which values Ele.me at $9.5 billion including debt, enables Alibaba to bring the startup deeper into its huge web of internet businesses that touch many areas of Chinese’ consumers’ lives. Tech companies are eager to cash in on China’s growing online food delivery market, which is expected to grow 18 per cent to 241 billion yuan ($38 billion) this year, according to research firm iiMedia. (The Washington Post)