AP
Activist hedge fund ValueAct Capital took a $2 billion stake in
He explained the investment by saying, "In three to five years, which is our time horizon, we’ll stop talking about PC cycles and instead talk about Microsoft as the largest cloud-computing company in the world."
For his sake, let's hope so. The PC business is imploding, so Microsoft's traditionally lucrative Windows business is flattening, and could start shrinking soon.
Microsoft has two other businesses that are doing well — Servers and Tools and the Business Division, which is home to Office. Those businesses are strong enough to offset Windows, for now.
Microsoft's stock has been flat for the longest time. A lot of investors have been tempted by it, believing there is value to be unlocked. So far, they've been wrong.
Microsoft is up 12% year to date, and rose 4% on today's news. It closed at $30.83.
ValueAct describes itself as a fund "that combines intensive due diligence, a concentrated number of investments, and active, constructive involvement in the value creation at those investments."
It has $10 billion in assets under management and it "concentrates on acquiring significant ownership stakes in a limited number of companies that it believes are fundamentally undervalued."
Ubben says ValueAct will not do any campaigning to change Microsoft's strategy, according to Reuters.
A Microsoft spokesperson gave us this comment on ValueAct: "Microsoft’s Board of Directors and management team welcome the perspectives of shareholders. We are committed to enhancing value for all shareholders, and will continue to take actions that we believe will enable us to achieve this objective."