Microsoft won a government contract for cloud computing services that is worth $10B over 10 years. The contract is for the Department of Defense and known as the JEDI contract (Joint Enterprise Defense Infrastructure). This has been in the news for a while as they were vying for the contract primarily with Amazon, who seemed favored to win. The contract itself is not a huge impact to MSFT’s numbers (given $140B in expected revenue in 2020 and the contract is for ~$1B/yr) – the more meaningful impact may be the win opening the potential for other government contracts. And in general it underscores the strength of Microsoft’s Azure cloud offering and its long-term potential. Some analysts are actually calling it a paradigm changer for Microsoft and a “landmark win that will change the cloud computing battle over the next decade.” Others think it is less meaningful given potential political interference in the bidding process and the possibility that Amazon may try to protest the outcome.
Sarah Kanwal
Equity Analyst, Director
Direct: 617.226.0022
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square, Suite 500
Boston, MA 02109
$MSFT.US
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