Chris, A Research Guy

Who just bought 20,000 $MSFT Aug $450 calls lol

In this particular case (SBUX headline on potentially replacing two inventory systems from IBM/MSFT w/ home built app, beginning in 2027), I'm not sure there is much signal. Its not clear what $MSFT product $SBUX is replacing - but SBUX was a known AX 2012 customer at some point, a perpetual license product that went ex-support in 2023. Linkedin job postings since mention $ORCL / $WDAY / $WK as core accounting systems, but not Dynamics 365. SBUX may still be on an old MSFT perpetual license, perhaps AX or perhaps Great Plains which is being sunset in 2029, or perhaps they built a custom app on Azure. If they are replacing 1 custom app with another one, its a net-neutral to MSFT. If they replace an old perpetual license with a new modern app on Azure, its a net positive to MSFT. Migrating off old systems is a tale as old as time in IT. And in horizontal categories like inventory mgmt, warehouse mgmt, for Fortune 500 companies, internally-built systems will always be on the table to consider bc few SaaS apps can scale to that degree and serve all the particular needs of a customer that size (why $TOST is an SMB product). Personally, I dont see this as evidence of disruption.

$IBM - surprised this is taking all of SaaS down with it. My ~subjective~ attribution of the IBM miss: • 50–60% IBM-specific execution and mainframe product-cycle issues • 25–35% emerging structural pressure on legacy/mainframe software • 10–20% broader enterprise deal timing and budget reprioritization Honestly, probably net neutral-to-bullish $MSFT considering the commentary around cybersecurity (people always forget $MSFT has the largest cybersecurity business in the world). And it’s the hyperscalers who should benefit from mainframe workload migration.

$IBM issue clearly mainframe related… mainframe hardware and mainframe software down, RedHat accelerating. “Given this was the strongest start to a mainframe program in our history, we expected infrastructure revenue to decline low-single digits for the year, beginning this quarter," Krishna wrote on Tuesday. "What played out was worse than our expectations, driven by a shortfall in our Z performance and the associated software stack, primarily in transaction processing. In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. This dynamic impacted client buying patterns." He added that the company did not anticipate the "magnitude of the capex reprioritization." Meanwhile, IBM's adjusted earnings climbed 5% to $2.93 per share, compared to expectations for $3.01 per share. "While our second-quarter results are disappointing, our performance in many areas showed strength, reinforcing the conviction we have in our portfolio and strategy," Krishna wrote. He pointed to Red Hat software growth accelerating to 11%.

BREAKING: President Trump has formally notified US Congress that the US is at war with Iran, per Politico. Details include: 1. The move gives Trump another 60 days to use the military in the region without congressional approval 2. Trump said strikes that began on July 7th represent "military action consistent with my responsibility to protect Americans and US interests both at home and abroad" 3. Trump also just said that he will "hit Iran hard" tonight amid mounting tensions The Iran War appears to be back again.

JUST IN: Lindsey Graham died from aorta rupture stemming from hardening of arteries, per AP

$MSFT is going out of business

I can't believe I have to say this but it's incremental ROIC that matters, not ROIC

Companies are issuing shares more, buying back less.