Please ensure Javascript is enabled for purposes of website accessibility

Dow Jones News: Microsoft Cloud Demand Soars; United Technologies' Merger Almost Complete

By Timothy Green - Mar 30, 2020 at 12:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Stay-at-home orders are boosting Microsoft's cloud business, and United Technologies is set to close its merger with Raytheon on Friday.

The stock market was staging a small rally on Monday morning, with the Dow Jones Industrial Average (^DJI 0.45%) up 1.2% at 11 a.m. EDT. Over the weekend, U.S. President Donald Trump extended social distancing guidelines through the end of April, signaling that the novel coronavirus pandemic won't be over anytime soon.

There are now at least 140,000 confirmed cases of the virus in the United States, and over 2,500 people have died, according to data from Johns Hopkins University. Dr. Anthony Fauci, head of the White House's coronavirus task force, recently warned that the death count in the United States could reach 200,000.

The grim news wasn't enough to derail the Dow on Monday. Helping to boost the index was Microsoft (MSFT 0.53%), which announced a massive surge in demand for cloud services due to the pandemic. Meanwhile, shares of United Technologies (RTX 1.18%) were little changed after the company announced that its merger with Raytheon would be a done deal by the end of the week.

Microsoft sees soaring cloud demand

Some parts of Microsoft's business are being negatively affected by the novel coronavirus pandemic and the associated economic uncertainty. The company warned last month that its "more personal computing" segment, which contains Windows, devices, and gaming, would fall short of expectations in the fiscal third quarter.

A digital rendering of a cloud.

Image source: Getty Images.

The cloud business is a different story. On Saturday, the tech giant provided an update on how its various cloud services were holding up during the pandemic. The company has seen a 775% increase in cloud services usage in regions with social distancing and shelter-in-place orders over the past week. Cloud services encompasses the Azure cloud platform as well as products like Teams, Windows Virtual Desktop, and Power BI.

In terms of individual products: Teams now has more than 44 million daily users, Windows Virtual Desktop usage has more than tripled, and governments using Power BI to share data related to the pandemic with citizens is up 42%.

While Microsoft hasn't had any major service disruptions, the company has seen deployment success rates drop below 99.99% in some regions due to the increased demand. The company is prioritizing access for first responders, emergency routing applications, healthbots, and other use cases related to fighting the pandemic.

It's unclear how much of this huge increase in demand for cloud services is temporary. It's also unclear how widespread deployment issues are on Microsoft's platform. The company is adding new capacity in the affected regions to deal with the increased demand.

Shares of Microsoft were up 5.2% Monday morning on the news. The stock remains down nearly 18% from its 52-week high.

United Technologies days away from merger

While the novel coronavirus pandemic is at the top of investors' minds, United Technologies is on the verge of completing its merger with Raytheon. United Technologies announced on Monday that it had received all necessary regulatory approvals for the all-stock merger, which the company calls a merger of equals.

The merger is expected to close before the market opens on Friday, April 3. This will coincide with the spin-offs of Carrier and Otis. The combined company will be renamed Raytheon Technologies Corp., and shares will begin trading on Friday. On top of the Carrier and Otis spin-offs, Raytheon's military airborne radios business and United Technologies' military GPS and space optical systems businesses will be divested after the merger is complete to satisfy regulatory concerns.

"We are more than just two businesses coming together -- Raytheon Technologies will be uniquely positioned to deliver advanced and innovative solutions to our customers while delivering significant value to shareowners," said Raytheon CEO Tom Kennedy.

United Technologies stock was roughly flat Monday morning. Shares of the industrial giant are down 39% from their 52-week high.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$293.47 (0.53%) $1.56
Raytheon Technologies Corporation Stock Quote
Raytheon Technologies Corporation
RTX
$96.13 (1.18%) $1.12
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,912.44 (0.45%) $151.39

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.