Hedge fund invests $2 billion in Microsoft, calls for Office to be released for iOS and Android

Microsoft may not be ready to port Office to iOS and Android, but a hedge fund titan, which just bought a nearly $2 billion stake in the company, wants Office to be released for devices beyond Windows. Will the suggestion make any difference at all to Microsoft?

The hedge fund ValueAct Holdings LP has taken a $1.9 billion stake in Microsoft, according to Bloomberg. The hedge fund is known for being an activist investor, not content to merely buy big chunks of stock in companies, but interested in influencing their direction as well. Bloomberg quotes Colin Gillis, an analyst at BGC Partners, as saying:

"They're value investors who don't mind being activists. If things aren’t working out, they would become more active."

The Wall Street Journal says of ValueAct:

ValueAct typically holds shares in a small number of companies, and it has been known for seeking board seats or asking for other changes at companies in which the fund invests.

A ZDNet report says that the company is already offering Microsoft advice, saying that it "called for Redmond to make Office available outside of Windows."

If true, that wouldn't be the first time an investor or analyst has called for Microsoft to make that move. In February, Morgan Stanley analyst Adam Holt said that Microsoft could get an additional $2.5 billion in Office revenue by releasing Office for iOS. And a few weeks ago, Gerry Purdy, principal of MobileTrax, said that Microsoft could gain get an additional $1.25 billion in revenue in the first year Microsoft releases iOS and Android versions of Office, and a whopping $6 billion in annual revenue by 2017.

Purdy's and Holt's numbers don't really add up, because they assume that Microsoft will sell standalone versions of Office for iOS and Android, rather than include them as part of Microsoft's Office 365 subscription service. Still, there's no doubt that iOS and Android versions of Office would be big revenue generators.

Some reports say that Office for iOS and Android won't be released until the fall of 2014. The likely reason is that Microsoft wants to give Windows RT and Windows 8 tablets a competitive advantage by making Office available for them, but not for competing tablets. I think that's a mistake, but given Microsoft's Windows-centric focus, it wouldn't surprise me.

Will ValuAct's investment and request make Microsoft release Office any sooner? Not likely. After all, even though $2 billion is a big chunk of change, it still only adds up to about 1% of Microsoft. And 1% won't get you very far. So don't expect Microsoft to change course about the future of Office any time soon.

Copyright © 2013 IDG Communications, Inc.

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