6 ms·

The purchase of github doesn't make immediate financial sense to me. This article posted a reason - to stave off Windows decline. While it is plausible, I still

by future1979 8y ago

The purchase of github doesn't make immediate financial sense to me. This article posted a reason - to stave off Windows decline. While it is plausible, I still don't see it.

tr33house 8y ago
Same here. I think there's another reason that's not so apparent
- deltron3030 8y ago
  Cultural reasons maybe. The Ruby/Rails community Github is also part of fits into the overall strategy of cultural change towards a more design and UX centric brand, that is recognized and respected by other designers beyond being just a tool for CAD modeling.
  - brutus1213 8y ago
    Here is what I don't get. It is far easier for github's dev community to move to an alternate than Facebook users. Unless there is revenue to back it up, I don't understand the 7.5 Billion price tag. Heck .. Docker for 10 Billion might have been plausible. What are the barriers to another entrant? This acquisition reminds me of the Minecraft acquisition. It did not make financial sense to me either. If Nadella keeps this up, he will eventually have issues with shareholders.
    - scarface74 8y ago
      This acquisition was essential free. This time, really, the profits don’t matter: Microsoft is paying by issuing about 73 million new shares of stock, which cost it nothing. (It’s a tiny dilution, given the company’s 7.7 billion shares outstanding; what’s more, the share price rose on the news, which means that existing shareholders are happy to be diluted.) https://slate.com/business/2018/06/microsoft-github-deal-why-the-usd7-5-billion-purchase-price-makes-sense.html https://slate.com/business/2018/06/microsoft-github-deal-why...
      - kgwgk 8y ago
        Using overvalued stock could make the acquisition “cheaper” than the sticker price (not really free). However, they’ve said they’ll do extraordinary buybacks to cancel the dilution in six months following the transaction. So unless the price of MSFT shares has a large correction during that period they are really going to spend over $7bn in cash.
        scarface74 8y ago
        Just to add to your response and making assumptions about how you came up with the $7 billion.... The new stock is about 1% of the total number of shares outstanding. Thier total market cap is around. $785 billion. If they did a stock buyback to cancel the dilution it would be 7.85 billion. My numbers are rounded - the new stock is actually less than 1% and the market cap as of right now is a little less than 785 billion so around 7 billion is more accurate.
        kgwgk 8y ago
        I just rounded down (to give a conservative estimate) the $7.5bn I've seen everywhere. If they are giving them new MSFT shares worth $7.5bn, buying those shares back would cost around $7.5bn assuming the price doesn't move. Of course it may be significantly more or less that depending on the evolution of the stock price. By the way, I said they will buy back stock in the next six months but it will be in the six months following the closing of the transaction (which is expected to take place by the end of the year). I've edited my previous comment slightly.
      - endorphone 8y ago
        That seems like spurious logic, especially given that Microsoft has spent many, many billions of their cash hoard on a stock buyback program (as does Apple, etc). By the broken logic of that Slate article, they're throwing money down a well foolishly because shares outstanding are "free". Further, noting the current day price change is always the basis for countless nonsense articles. The shares haven't been diluted yet -- not until the deal closes later in the year -- and a temporary blip one way or another is close to meaningless.
    - oblio 8y ago
      He tripled the stock price. I doubt shareholders are sad :)
      - endorphone 8y ago
        Brutus said eventually, and that's an entirely reasonable statement. Microsoft has burned many, many billions on foolish ventures to try to regain namespace, while at the same time the entirety of their revenue is still based on the coasting remains of the empire they built a decade ago. Microsoft's revenue has stagnated, despite endlessly acquiring and adding new verticals to the stack. To put it another way, simply doing the SAP and squeezing Windows + Office would have netted a much more profitable business than everything Microsoft has been doing.
        oblio 8y ago
        Azure is a new business.
        endorphone 8y ago
        Azure has negligible profit (if any), and it's profoundly telling that Microsoft always hogties Azure numbers with Windows Server sales. The press remarkably buys this hook line and sinker, repeats this Intelligent Cloud prattle as if it's true. [As an aside, Microsoft's continuing tendency to group success with losers, shuffling them around to opaque the numbers, is something that sees far less skepticism than it should. We saw this with Windows Mobile cum Phone where they tried to put on the face of success for as long as possible] Microsoft was traditionally a very high profit margin company, and their software offerings still are. Azure might sound good to make them seem like they're still with it, but it is deadly long term (massive capital expenses, fast depreciation, and very low margins).
- deleted 8y ago
  [deleted]
avip 8y ago
Which MS acquisition did make sense? Skype? Nokia? LI? Yammer?
- clbrook 8y ago
  Xamarin
  - evilmushroom 8y ago
    I have literally had a mobile team threaten to quit if we adopted Xamarin after they built a small app in it lol.
    - dagaci 8y ago
      Xamarin can be pretty tough if you don't have a good appreciation of Xcode, iOS and UWP development and tooling, and underlying differences.
      - evilmushroom 8y ago
        Oh, they understood it, top tier mobile devs, they just thought it was trash. Drastically preferred to do native. I went to bat for them, and we shipped a beautiful app on time.
- nickcox 8y ago
  aQuantive
  - scarface74 8y ago
    https://money.cnn.com/2012/07/02/technology/microsoft-aquantive/index.htm https://money.cnn.com/2012/07/02/technology/microsoft-aquant...
- davidgay 8y ago
  https://en.wikipedia.org/wiki/Microsoft_PowerPoint#History https://en.wikipedia.org/wiki/Microsoft_PowerPoint#History
apapli 8y ago
The reason? Simple. Developer mindshare. Microsoft lost it with Ballmer, and is getting it back under Satya. Ultimately Microsoft's success has always stemmed from providing platforms that support developers, and in turn they build great products people will pay for. And that drives Microsoft revenues, be it the OS, or nowadays, SaaS PaaS and IaaS (and OS).
- JshWright 8y ago
  > Developer mindshare. Microsoft lost it with Ballmer When I think of Ballmer, the first word that comes mind is "developers" (it's also the second... and the third...)
  - chrisweekly 8y ago
    LOL Ditto. But. Being memorable for ridiculous antics doesn't quite translate into winning hearts and minds.
  - isostatic 8y ago
    I think of Donkey Kong shouting "Developers Developers Developers!" while throwing chairs rather than barrels
- mariusmg 8y ago
  > Developer mindshare. Just have to point out how fucking expensive develope mindshare is then :) But seriously, from a business perspective buy GitHub (a company which gobbled up lots of VS money without a good business model) the acquisition doesn't makes any sense.
nathankunicki 8y ago
In my view it's a longer term proposition to gain more customers for Azure/Microsoft Cloud. Google, Microsoft, and Amazon all see the future of computing as being in the cloud. If Microsoft can integrate Azure and GitHub to make it easier for developers to deploy and run their code in the cloud, then that means more Azure customers. This likely means that GCP and AWS integrations will take second place.
- pjmlp 8y ago
  They already do so. They had a joint presentation at BUILD 2018, how to have a full CI/CD pipeline in Azure, with code taken from Github. Now in retrospective, maybe the talks were already ongoing.
  - pythonaut_16 8y ago
    To be fair though, that sort of thing has already been very possible for anyone with the desire and engineering resources. The only thing those types of demonstrations and announcements tend to actually do is announce/release a tool that does most of the legwork for you.
- chaosite 8y ago
  That doesn't make sense to me. GitHub integration is already pretty easy, the GitHub API is fine. Heroku for example is already pretty well integrated with GitHub, and they didn't have to buy anything.
  - ozim 8y ago
    Maybe you know next year it will by coincidence get harder to integrate with Heroku. If they would buy it, somehow it could get harder to integrate with Azure.
- deleted 8y ago
  [deleted]

The purchase of github doesn't make immediate financial sense to me. This article posted a reason - to stave off Windows decline. While it is plausible, I still don't see it.

tr33house 8y ago

Same here. I think there's another reason that's not so apparent

deltron3030 8y ago
Cultural reasons maybe. The Ruby/Rails community Github is also part of fits into the overall strategy of cultural change towards a more design and UX centric brand, that is recognized and respected by other designers beyond being just a tool for CAD modeling.
- brutus1213 8y ago
  Here is what I don't get. It is far easier for github's dev community to move to an alternate than Facebook users. Unless there is revenue to back it up, I don't understand the 7.5 Billion price tag. Heck .. Docker for 10 Billion might have been plausible. What are the barriers to another entrant? This acquisition reminds me of the Minecraft acquisition. It did not make financial sense to me either. If Nadella keeps this up, he will eventually have issues with shareholders.
  - scarface74 8y ago
    This acquisition was essential free. This time, really, the profits don’t matter: Microsoft is paying by issuing about 73 million new shares of stock, which cost it nothing. (It’s a tiny dilution, given the company’s 7.7 billion shares outstanding; what’s more, the share price rose on the news, which means that existing shareholders are happy to be diluted.) https://slate.com/business/2018/06/microsoft-github-deal-why-the-usd7-5-billion-purchase-price-makes-sense.html https://slate.com/business/2018/06/microsoft-github-deal-why...
    - kgwgk 8y ago
      Using overvalued stock could make the acquisition “cheaper” than the sticker price (not really free). However, they’ve said they’ll do extraordinary buybacks to cancel the dilution in six months following the transaction. So unless the price of MSFT shares has a large correction during that period they are really going to spend over $7bn in cash.
      - scarface74 8y ago
        Just to add to your response and making assumptions about how you came up with the $7 billion.... The new stock is about 1% of the total number of shares outstanding. Thier total market cap is around. $785 billion. If they did a stock buyback to cancel the dilution it would be 7.85 billion. My numbers are rounded - the new stock is actually less than 1% and the market cap as of right now is a little less than 785 billion so around 7 billion is more accurate.
        kgwgk 8y ago
        I just rounded down (to give a conservative estimate) the $7.5bn I've seen everywhere. If they are giving them new MSFT shares worth $7.5bn, buying those shares back would cost around $7.5bn assuming the price doesn't move. Of course it may be significantly more or less that depending on the evolution of the stock price. By the way, I said they will buy back stock in the next six months but it will be in the six months following the closing of the transaction (which is expected to take place by the end of the year). I've edited my previous comment slightly.
    - endorphone 8y ago
      That seems like spurious logic, especially given that Microsoft has spent many, many billions of their cash hoard on a stock buyback program (as does Apple, etc). By the broken logic of that Slate article, they're throwing money down a well foolishly because shares outstanding are "free". Further, noting the current day price change is always the basis for countless nonsense articles. The shares haven't been diluted yet -- not until the deal closes later in the year -- and a temporary blip one way or another is close to meaningless.
  - oblio 8y ago
    He tripled the stock price. I doubt shareholders are sad :)
    - endorphone 8y ago
      Brutus said eventually, and that's an entirely reasonable statement. Microsoft has burned many, many billions on foolish ventures to try to regain namespace, while at the same time the entirety of their revenue is still based on the coasting remains of the empire they built a decade ago. Microsoft's revenue has stagnated, despite endlessly acquiring and adding new verticals to the stack. To put it another way, simply doing the SAP and squeezing Windows + Office would have netted a much more profitable business than everything Microsoft has been doing.
      - oblio 8y ago
        Azure is a new business.
        endorphone 8y ago
        Azure has negligible profit (if any), and it's profoundly telling that Microsoft always hogties Azure numbers with Windows Server sales. The press remarkably buys this hook line and sinker, repeats this Intelligent Cloud prattle as if it's true. [As an aside, Microsoft's continuing tendency to group success with losers, shuffling them around to opaque the numbers, is something that sees far less skepticism than it should. We saw this with Windows Mobile cum Phone where they tried to put on the face of success for as long as possible] Microsoft was traditionally a very high profit margin company, and their software offerings still are. Azure might sound good to make them seem like they're still with it, but it is deadly long term (massive capital expenses, fast depreciation, and very low margins).
deleted 8y ago
[deleted]

avip 8y ago

Which MS acquisition did make sense? Skype? Nokia? LI? Yammer?

clbrook 8y ago
Xamarin
- evilmushroom 8y ago
  I have literally had a mobile team threaten to quit if we adopted Xamarin after they built a small app in it lol.
  - dagaci 8y ago
    Xamarin can be pretty tough if you don't have a good appreciation of Xcode, iOS and UWP development and tooling, and underlying differences.
    - evilmushroom 8y ago
      Oh, they understood it, top tier mobile devs, they just thought it was trash. Drastically preferred to do native. I went to bat for them, and we shipped a beautiful app on time.
nickcox 8y ago
aQuantive
- scarface74 8y ago
  https://money.cnn.com/2012/07/02/technology/microsoft-aquantive/index.htm https://money.cnn.com/2012/07/02/technology/microsoft-aquant...
davidgay 8y ago
https://en.wikipedia.org/wiki/Microsoft_PowerPoint#History https://en.wikipedia.org/wiki/Microsoft_PowerPoint#History

apapli 8y ago

The reason? Simple. Developer mindshare. Microsoft lost it with Ballmer, and is getting it back under Satya. Ultimately Microsoft's success has always stemmed from providing platforms that support developers, and in turn they build great products people will pay for. And that drives Microsoft revenues, be it the OS, or nowadays, SaaS PaaS and IaaS (and OS).

JshWright 8y ago
> Developer mindshare. Microsoft lost it with Ballmer When I think of Ballmer, the first word that comes mind is "developers" (it's also the second... and the third...)
- chrisweekly 8y ago
  LOL Ditto. But. Being memorable for ridiculous antics doesn't quite translate into winning hearts and minds.
- isostatic 8y ago
  I think of Donkey Kong shouting "Developers Developers Developers!" while throwing chairs rather than barrels
mariusmg 8y ago
> Developer mindshare. Just have to point out how fucking expensive develope mindshare is then :) But seriously, from a business perspective buy GitHub (a company which gobbled up lots of VS money without a good business model) the acquisition doesn't makes any sense.

nathankunicki 8y ago

In my view it's a longer term proposition to gain more customers for Azure/Microsoft Cloud. Google, Microsoft, and Amazon all see the future of computing as being in the cloud. If Microsoft can integrate Azure and GitHub to make it easier for developers to deploy and run their code in the cloud, then that means more Azure customers. This likely means that GCP and AWS integrations will take second place.

pjmlp 8y ago
They already do so. They had a joint presentation at BUILD 2018, how to have a full CI/CD pipeline in Azure, with code taken from Github. Now in retrospective, maybe the talks were already ongoing.
- pythonaut_16 8y ago
  To be fair though, that sort of thing has already been very possible for anyone with the desire and engineering resources. The only thing those types of demonstrations and announcements tend to actually do is announce/release a tool that does most of the legwork for you.
chaosite 8y ago
That doesn't make sense to me. GitHub integration is already pretty easy, the GitHub API is fine. Heroku for example is already pretty well integrated with GitHub, and they didn't have to buy anything.
- ozim 8y ago
  Maybe you know next year it will by coincidence get harder to integrate with Heroku. If they would buy it, somehow it could get harder to integrate with Azure.
deleted 8y ago
[deleted]