Hedge fund giant ValueAct Holdings LP has taken a nearly US$2 billion stake in Microsoft—provided they port Microsoft Office to both iOS and Android. Currently, Microsoft Office is currently available on Windows and Mac OS X. In a tech environment that is becoming increasingly mobile, one would think that Microsoft Office, one of the most widely used programs in the world, would also be available on mobile devices.
According to Colin Gillis, an analyst at BGC Partners, ValueAct Holdings LP is more than just an investor—they also seek to have an influence within the company. “They’re value investors who don’t mind being activists. If things aren’t working out, they would become more active,” he said.
The Wall Street Journal described ValueAct Holdings LP as a company that also seeks out positions on a company’s board of directors. “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,” they reported.
Analysts have said that Microsoft only seeks to gain from porting one of their most widely-used programs onto iOS and Android. Accroding to Morgan Stanley analyst Adam Holt, Microsoft could get an additional US$2.5 billion in Office revenue by releasing Office for iOS. Gerry Purdy, principal of MobileTrax, said that Microsoft could gain US$1.25 billion in revenue in the first year Microsoft releases iOS and Android versions of Office, and also said that number could grow to US$6 billion by 2017.
Holt and Purdy’s numbers are different namely because it is assumed that Microsoft will sell standalone versions for iOS and Android rather than include it in its Microsoft 365 subscription service. Although it is not yet final whether or not Microsoft Office will be released for iOS and/or Android, some reports are pointing towards a fall 2014 release. One of the reasons it may not even happen is because Microsoft wants to give its Windows RT and Windows 8 tablets an edge over iOS and Android by keeping Microsoft Office exclusive for Windows products only, and to keep Office out of reach of the iPad and the various Android tablets.
Could ValueAct’s US$2 billion investment force Microsoft to change their hand? According to this article, US$2 billion only amounts to 1% of Microsoft, so it might not happen, and given ValueAct’s penchant for activism, it could even entrench Microsoft to keep Microsoft Office a Windows RT and Windows 8 affair only. Nothing is 100% confirmed yet, as is the nature of rumors in the tech world and elsewhere, but we’ll keep you posted.