
Satya Nadella Added $850B to Microsoft - totaldude87
https://www.afr.com/technology/how-satya-nadella-added-850b-to-microsoft-20191114-p53ajl
======
stakhanov
First: A stock can rise for reasons having zero to do with the reality of the
business behind the stock, for example mispricing, availability or the lack
thereof of alternative investments, inflation, currency devaluation etc.
Second: To me it always leaves a very foul aftertaste when the achievements of
a team are ascribed to whoever the visible front-person is. I find it hard to
believe that among the other 149999 employees that Microsoft has, there aren't
some that deserve to be mentioned in relation to this achievement as much or
even more than Satya Nadella does.

~~~
yodon
Bill Gates built an amazing airplane. Steve Ballmer crashed it in the desert.
Satya Nadella rallied the survivors, put it back together, and got it flying
again. Yes, he absolutely deserves the credit just as Ballmer absolutely
deserves the blame.

~~~
hylaride
Actually, Ballmer did quite well at MS. He consistently increased earnings via
Windows and Office during his tenure as CEO. He was a _very good_ businessman.

He was not, however, a product guy. Witness their failures with the Zune,
mobile, early cloud computing. His problem was that he always tried to do what
would be best for Microsoft and not the customer. You can get away with this
if you already have an install base (windows/office), but with net new
products people will look at what's best for them first. Even with _developers
developers developers_ he tried too hard to get people to use pure MS tech and
made developing for the web on MS ugly if you using anything other than .NET.
The result is a generation of developers on Macs and to a lesser extent linux.

Funny enough, thinking of the customer is what MS did with the xbox and it
worked out well enough.

~~~
darkmighty
I feel that reflects quite well Steve Jobs vs Tim Cook as well. Jobs just
wanted to make 'insanely great' products [for their users], with the side
effect of profit, while Tim Cook is probably fixated on efficiency and
Shareholder value. Apple has had record profits and performance, but most will
tell it's not the same and its future is not so certain.

It seems paradoxical that trying to maximize shareholder value at all costs
could have the opposite effect long term; but think of it this way: almost
every company in the world is fixated on profit -- that's not a
differentiator. What makes the company is amazing products that people _need_
, even _depend upon_ \-- once you have that, it is very hard to fail.

Profit singlemindedness can definitely lead you astray, be fragile (of course,
the 'user-oriented' robust strategy can be thought as ultimately also a form
of profit seeking).

What Nadella seems very competent at doing is also pleasing his workforce as
an additional important stakeholder.

~~~
r00fus
> Tim Cook is probably fixated on efficiency and Shareholder value.

Tim was the 2nd in command of Apple for years. Easy to forget this, but
Apple's success in the 2000s is partially attributable to Tim as well (not to
forget all the other brilliant folks at Apple).

~~~
corybrown
Ballmer was the 2nd in command of MSFT for years as well, doesn't he deserve
the same credit as Cook?

~~~
r00fus
I'd probably agree. It might also be a Peter Principle thing where
Ballmer/Cook were great at busdev/ops respectively while Gates/Jobs were more
inspiring leaders.

------
kickscondor
If you're curious why this run-of-the-mill PR piece is rising on HN, keep in
mind that Microsoft (and other FAANG) posts like these are gamed by employees.
[https://www.kickscondor.com/satya-
nadella-'reads''games'-hac...](https://www.kickscondor.com/satya-
nadella-'reads''games'-hacker-news/)

~~~
tikkabhuna
Whilst that doesn't read well, is that quote confirming that he's "gaming" HN?
To me that could be read as "We're focusing on interacting with the community
to answer questions, gain feedback, and address concerns."

I do tend to give people the benefit of the doubt though...

~~~
kickscondor
If Microsoft employees are 'working hard to make sure that Azure is growing in
popularity' on HN - what do you think the chances are that they are not
upvoting as part of that? (I don't know - perhaps they are secretly following
some monkish creed to abstain from clicking on triangles...)

~~~
o-__-o
When I see one of my past employers mentioned on HN, I upvote if the post
matches reality of working there. Cults die hard

------
saagarjha
> The company is the world's strongest supporter of the Linux open source
> coding system

Citation needed.

Also, a gentle reminder that Satya Nadella, as amazing as he might be, is not
the sole reason why Microsoft's stock price has gone up.

~~~
haasted
The phrase "coding system" provides a good hint of the level of insight
possessed by the journalist.

~~~
saagarjha
I'd rather not judge the journalist's sourcing abilities by a perception of
their expertise in the field that comes from two words. To put it another way:
assuming good faith, it's entirely possible that the journalist was told some
sort of statistic that agreed with the statement they made; I'm simply curious
as to what it might be.

~~~
jdminhbg
That's too charitable. I wouldn't accept the vetting of any football-related
news by a journalist who referred to the NFL as a "ball management
organization."

~~~
saagarjha
I would if they cited their sources so I could verify their claims for myself.
In my eyes it's OK for the journalist of an article like this to not to be an
expert in the field, but they should be able to provide a somewhat coherent
summary of a topic and allow readers to perform their own analysis on the
parts they care about.

~~~
jdminhbg
We're not talking about whether or not someone is an expert, we're talking
about whether they have even a passing familiarity. What an operating system
is isn't esoteric knowledge.

~~~
saagarjha
You'll find that it's not common knowledge among the general population, and
presumably to some extent among the readership and authors of a financial
newspaper.

~~~
jdminhbg
It's fine to not know what an operating system is. There are lots of areas of
life where I'm almost totally ignorant. The difference is I wouldn't try to
report on them before I learned very basic, elementary things about them. It's
not too much to expect someone to learn "it's like Android or iOS" before
professionally writing about it.

------
ozborn
I absolutely despise these hero worship type headlines, even if the individual
made an important contribution. I realize headlines are written by editors
(not by the author) so I don't blame the writer (the article is well written)
but such headlines contribute to the already awful cult of celebrity worship
and CEO salary inflation which doesn't need any more fuel.

Headlines like these are the equivalent of scientific papers with no
citations, no coauthors, no acknowledgements - as if the author was solely
responsible for creating all the value merely by thinking in the aether. These
types of scientific papers don't exist outside crank pot science for good
reason - they are ludicrous. Just like this headline.

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nooyurrsdey
Microsoft has defintiely made great business decisions under Nadella. His
vision in recognizing cloud investment must not have been an easy thing for
the board to accept.

Two things I dislike about this article

1\. It's tone is so favorable to Nadella and Microsoft, it feels like it was
written by a fan. Amazon and Bezos are described as childish. They may be but
it feels like the article has an agenda

2\. Why is this a novel? The first third of this covers the main points but it
keeps going

------
mathattack
Unfair to give him credit for all 850, but he’s done a phenomenal job as CEO.
The cloud focus is obvious in hindsight, but Ballmer would still be milking
Windows, and imagine if they installed a non-tech CEO.

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panpanna
Well, these days you _can_ run a company without a single Windows machine.

What you cannot do (once you are more than a handful) is to not use any
Microsoft cloud services (exchange online, office 365, skype fb, teams, ...)
while doing business with other companies.

Satya saw this way before the rest of us.

------
randcraw
Counterpoint: Maybe the departure of Steve Ballmer added $850B to Microsoft?

~~~
ur-whale
Counter-counterpoint: but there's a lot less onstage dancing and screaming.

~~~
notmyaccount
Counter-counter-counterpoint: That erased 850b in value. It could have been
1700b but Nadella doesn't dance or scream. Just stares angrily.

~~~
cheez
You leave IT Ghandi alone.

~~~
notmyaccount
Your Windows is gonna spontaneously explode killing all of humanity.

------
cryptica
The title is bs. Microsoft had a lot of legacy software which served as an on-
ramp for Microsoft Cloud. MS success in the cloud is all a result of MS's past
monopoly and has nothing to do with any individual who works for Microsoft.

I bet Satya Nadella is just another corporate bureaucrat who is skilled at
taking credit for success which has nothing to do with them.

I don't buy it for 1 second that someone who is good at creating value could
have the patience to spend almost 30 years working in a bureaucratic and
monopolistic corporation like Microsoft and I doubt that it's even possible to
learn these kinds of skills there. On the other hand, I think there is
probably no better place to master the art of social manipulation and
backstabbing.

------
ibatindev
He made the right call by putting the cloud first, that's where real revenue
come from. Nevertheless, let's remind that $MSFT has around 150k employees,
where literally thousands are top tier in their position all across the
industry.

~~~
intsunny
Isn't the lion's share of MSFT's profits from their traditional OS and Office
business units?

~~~
dharmab
Check out their Q4 earnings release; Azure and cloud services are the products
with highest growth. IIRC While Office desktop is still a major revenue source
the market is trending towards Office 365, and Windows is behind cloud
services revenue.

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rdlecler1
You could also frame it as Balmer was depressing Microsoft by $850b, that they
were not reaching their potential.

~~~
chasingthewind
It would be great if there was a "billions above replacement" statistic for
CEOs.

------
blobbers
The CEO does not deserve all of the credit. American compensation mechanisms
for executives are completely broken.

The concept of WAR (Wins Above Replacement) needs to be brought into the
business world.

An sub par player on the Yankees will still win a lot of pennants.

I'm not saying Satya is that guy, but generally speaking these sensationalist
headlines are a problem!

~~~
sumedh
> The CEO does not deserve all of the credit.

Who gets the blame when companies like Nokia and RIM implode?

~~~
anoncake
No, the question is who deserves the blame.

~~~
sumedh
So who deserves the blame?

~~~
blobbers
The large group of strategy executives that had hubris related to touch
screens. RIM got killed by the iphone AND android. Perhaps it was inevitable -
the iphone is the only real premium smartphone on the market. It's a zero sum
game?

~~~
sumedh
> The large group of strategy executives that had hubris related to touch
> screens.

So in a way its the CEO's fault for hiring/having such executives?

------
gist
This is a typical cherry picked business leader article where you can find
examples to make any point that you want (or don't want). This is the reason
that I stopped years ago even reading business magazines (you know the ones
with the airport candy shop headlines).

They all follow the same 'hero' or 'zero' angle and typically have no access
to the nuance (or underplay it) and complexity that goes into any success or
failure. Nice reading though.

Note: Then I see this of all things: 'Disclosure: The author's self-managed
super fund owns shares in Microsoft."

------
salvagedcircuit
I would argue that even though the surface line has been a regarded as a
financial failure, it is one of their most important developments to this
date. Microsoft has been developing hardware for user interface design behind
closed doors for years, and never released anything to the public before
surface. Sure, the surface line was originally pushed by Ballmer, but I am so
very glad that Nadella did not just look at financial statistics and just kill
it. Hats off to you Nadella.

------
raxxorrax
Microsoft currently capitalizes on their monopoliy for office software with
their new form of cloud monetization. But many users are very discontent.

------
JustSomeNobody
And when it drops, the engineers will get fired before he does. This is an
example of where you _can_ have it both ways.

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blueboo
The only thing that matters in companies is the CEOs. You can tell because the
stock changed when they held the position.

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bitxbit
Really, it’s the fact that MS had enough cash to burn through all the bad
mistakes and arrive at the next technology leap in cloud computing. They were
able to fail their way toward success because of the monopoly they enjoyed for
two decades. I am afraid the same thing will happen (or is already happening)
to Apple.

------
csomar
From his chart:

\- MSFT revenue/share price @ 2014: 86.8 / 37.1

\- MSFT revenue/share price @ 2019: 125.8 / 133.52

-> revenue growth: 44.93% / price growth: 259.89%

So either MSFT was significantly under-priced in 2014 or it's over-priced
right now.

Also: Disclosure: The author's self-managed super fund owns shares in
Microsoft.

~~~
Jyaif
The share price is not correlated the current revenue, otherwise it would be
extremely simple to predict the share price. It's correlated to the predicted
future profit.

------
stephbu
Person of the year should go to Amy Hood - she brought the divide under
control by starving funding and driving consolidation. It’s hard to have
internecine fights when you can’t afford the guns.

------
hos234
I am skeptical about the whole Cloud story. Has the faint stench of the
housing bubble.

It made sense when the story was about renting out spare data center capacity.
Amazon and Google had a ton of excess which started the story.

Microsoft, Oracle, IBM et al did not, but had to react to Amazon and Google
Cloud and had to build up capacity. Then the game turned into ensuring all
that new capacity was utilized. Enterprise needing to make the shift to Cloud
is driven almost mindlessly by that fact, much more than actual Enterprise
needs and issues. Utilization is achieved by smart marketing, a ton of it,
targeted at dumb Enterprise.

This feels like some honeymoon period.

~~~
gph
I don't think it's dumb for most small to mid-size enterprise companies to
migrate to the cloud. Being able to outsource IT/infrastructure is quite
beneficial when your needs aren't so big that it makes sense to set up your
own datacenter. And it's far more flexible, if you suddenly start getting a
lot more or less traffic you can quickly upgrade/downgrade to what you need.

~~~
eirini1
tbh I think its eventually going to be an enviromental requirement to put
everything in the cloud.

At work we have an application used by financial advisors in offices during
working hours only.

Why do we need to have 4 whole machines spinning 24/7 (in the name of
reliability and availability) when we only need a fraction of that computing
power and only between 08:00 and 17:00?

------
agumonkey
The fact that Microsoft is still alive and somehow kicking is a surprise in
itself. Computing market swerved wildly and they could have fall apart easily

------
EGreg
Why so little? What went wrong?

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tempsy
Microsoft's P/E ratio is a bit nutty. Investors are expecting big things.

~~~
gzu
Also this Nadella period coincided with a massive rise in passive investing
and buyback of shares.

Investors are buying the stock because it’s one of the largest in the indexes
weighing in at nearly 5% of the SP 500 market cap. Because of passive
investments and mutual funds trying to match passive (index) returns, a nickel
of every dollar invested in the stock market goes directly to buy Microsoft
without any human consideration.

------
BLanen
Microsoft workers added $850b while Satya Nadella is CEO.

------
whalabi
Pretty sure the employees had something to do with it

------
juststeve
Socialize the development, privatize the profits.

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nabla9
The JEDI deal going to MS might have lot to do with Trump-Bezos feud. Amazon
is suing and there may be good reason for them to do so.

~~~
Mountain_Skies
might, may

So it might also just be because Microsoft had the better offering and Amazon
may not have a good reason to sue. Might, may, could end up either way.

~~~
nabla9
Trump has publicly interferd with the process and apparently also pressured
Mattis in private. I think Amazon has a case.

------
systemdtrigger
Half of that is Trump though.

------
new_realist
Satya takes all the credit for Trump wanting to punish Bezos?

~~~
trianglem
With that relatively measly $10 billion defense deal?

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WooShoa
Does anyone know what this $850,000,000,000.00 looks like in reality? Where
was that value created?

Did they sell that many more … what exactly? I am just trying to understand
where that value is.

Or was this essentially all stock buybacks that artificially inflate the
"value" as established by the market cap?

Ironically too is that when you control the MSFT market cap against the Trump
inflated stock market, there is actually no actual gain, especially when you
control for stock buybacks, aka, corporate stock self-inflation.

~~~
cheez
850 billion can be broken down by:

* Long term customers gained

* Goodwill created

* New products

All of this reduces to "discounted future revenue". Say you have a 10 year
target on MSFT. Do you think MSFT will make $850 billion dollars more in the
next ten years than they did in the last ten years? MSFT revenue has doubled
in the last ten years. Even if it does not grow at all, they will earn around
$1T in the next ten years as compared to (about) $800 billion in the last ten.

Edit: and if you DO think it will grow then perhaps $850B of value is perhaps
the top line.

------
coliveira
He didn't add anything! Most of the fluctuation in a stock are due to market
conditions. Second, almost all the work was done by workers in that company.
The narrative that CEOs can do anything by themselves is a stupid myth that
needs to be combatted.

