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[转贴] Microsoft: Start of a Three-Year Enterprise ‘Super Cycle?’

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发表于 2018-3-12 11:09 PM | 显示全部楼层 |阅读模式




Deutsche Bank’s Karl Keirstead today relates his trip to Redmond, Washington last week to meet with Microsoft (MSFT) executives in the presence of investors, and how he left feeling even more bullish than when he went in.

In fact, he’s thinking there may be something of a “three-year super cycle” in enterprise buying, and not just cloud computing use.

Keirstead, who has a Buy rating on Microsoft, and a $120 price target, writes that executives in the meeting emphasized Microsoft’s “hybrid cloud” approach, meaning, ability to supply both public cloud computing in Azure, and also stuff that’s in a customer’s own data center. The executives emphasized the “Azure Stack” as a key tool that makes Microsoft different from Amazon’s (AMZN) AWS, and Alphabet’s (GOOGL) Google’s Compute Cloud.

He notes, too, that executives said they’re offering “flexible” licensing of server products, so people can pay for their data center license and then move that to Azure. "This implies that a) Azure discounting could be greater than what we/investors see by monitoring per-unit list prices and b) the lines between Microsoft’s Azure and on-premise Server Product businesses are blurring somewhat."

Keirstead writes that some customers are signing up to “very large Azure deals,” but its still early days, and one source of his outside the company "did believe that the notion that Azure is now about 1/3 the size of AWS (based on our estimates) felt 'high', as most of the big tech/internet consumers of cloud services (Netflix, Expedia) as well as most of the smaller cloud-native customers are on AWS."

Away from the meeting, Keirstead heard from some CIO sources who are suggesting to him that there could be the beginnings of a “super cycle” in enterprise buying, after eight years of sluggishness:

However, this same source argued that 90%+ of overall enterprise workloads remain on-premise and that many F500 CIOs are recognizing the imperative of “digital transformations” and utilizing technology to grow and to prevent disruption such that the desire to modernize their on-premise infrastructures is now so strong that it is outpacing any drag from the move to the public cloud model.

If the notion of a 3-year super-cycle of enterprise IT spending is even remotely accurate, this current rally in enterprise tech stocks may have plenty of room to continue. We obviously need to collect more such data points to confirm the thesis, but in our view this idea is not outlandish given that we’re seeing evidence of an improving economy on the back of tax reform and other drivers (which should trickle-down to IT spend), large enterprise IT spending growth felt anemic for many years following the 2008/2009 recession (many large organizations were likely sweating their IT assets for periods well beyond normal) and technology is indeed becoming a greater competitive weapon, moat and productivity lever in many industries (motivating many to “digitally transform”).

A 3-year spending recovery following 8 years of sluggish enterprise IT spending growth is indeed plausible. The possibility of a longer duration IT spending uplift dissuades us from getting nervous about some enterprise software stocks that have had healthy runs over the last year and are trading at peak valuation multiples.

Microsoft shares today closed up 23 cents at $96.77.
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