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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Microsoft Corporation    MSFT

MICROSOFT CORPORATION

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Microsoft : weighs TikTok purchase as ad business flattens out

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07/31/2020 | 11:50pm EDT
Silhouettes of laptop and mobile device users are seen next to a screen projection of Microsoft logo in this picture illustration

OAKLAND, Calif. (Reuters) - Microsoft Corp could re-energize its advertising business with a huge supply of video if it follows through on acquiring TikTok's U.S. operations from ByteDance.

Reuters reported on Friday, citing a source familiar with the matter, that Microsoft is in exploratory deal talks as the U.S. government prepares to force China-based ByteDance to divest its video app TikTok over data security concerns.

Microsoft generates the bulk of its $143 billion in annual revenue by licensing software such as Windows and Office as well as cloud storage and computing tools through its Azure service.

The company, with advertising supported businesses including its Bing search engine, MSN news service and LinkedIn business social network, disclosed this month that its search ads sales grew 1% to $7.7 billion over the last year. But that growth was flat when excluding fees it pays to partner websites and apps.

The ad market research company eMarketer has estimated LinkedIn's ad revenue at about $2 billion annually in the United States alone. But Microsoft also said this month LinkedIn ads sales have fallen this year as the novel coronavirus pandemic prompted advertisers to pare spending.

Social media services, including Facebook Inc and Alphabet Inc's YouTube, have seen their sales growth continue during the pandemic as users spend more time entertaining themselves online - particularly with video - and advertisers follow them there.

Without an entertainment service aimed at a broad audience, Microsoft has struggled to capture the increasingly lucrative videos flowing to YouTube, Facebook and more recently TikTok, which widely opened its ad tools this month.

Increased U.S. regulatory scrutiny of potentially anticompetitive behavior by Facebook and YouTube have likely diminished their ability to purchase a major competitor soon, according to antitrust experts. Microsoft, though, faces fewer constraints.

"Its consumer strategy remains in flux and an aggressive acquisition (or strategic investment) of TikTok would be Microsoft throwing its hat in the ring and trying to compete with other tech giants in a new avenue of growth," Wedbush financial analyst Dan Ives said in a statement on Friday.

By Paresh Dave

Stocks mentioned in the article
ChangeLast1st jan.
FACEBOOK 1.80% 260.77 Delayed Quote.24.79%
MICROSOFT CORPORATION 2.65% 208.77 Delayed Quote.28.97%
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Financials (USD)
Sales 2021 157 B - -
Net income 2021 48 985 M - -
Net cash 2021 81 454 M - -
P/E ratio 2021 31,7x
Yield 2021 1,06%
Capitalization 1 539 B 1 539 B -
EV / Sales 2021 9,31x
EV / Sales 2022 8,28x
Nbr of Employees 163 000
Free-Float 98,6%
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Mean consensus BUY
Number of Analysts 36
Average target price 229,59 $
Last Close Price 203,38 $
Spread / Highest target 27,8%
Spread / Average Target 12,9%
Spread / Lowest Target -11,5%
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NameTitle
Satya Nadella Chief Executive Officer & Non-Independent Director
Bradford L. Smith President & Chief Legal Officer
John Wendell Thompson Independent Chairman
Kirk Koenigsbauer COO & VP-Experiences & Devices Group
Amy E. Hood Chief Financial Officer & Executive Vice President
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