Why Has Microsoft Stock Popped 6% In Two Days?

Steve Ballmer

Photo: Wikipedia

Microsoft stock is up 6% since the beginning of the week, with a particularly big 2% pop right at the close of trade today.Are traders hearing gossip that Steve Ballmer is about to step down?

Don’t count on it.

The more likely reason has to do with Microsoft’s sales cycles to its largest customers.

A lot of big companies and government organisations buy their software on three-year (or five-year) agreements called Enterprise Agreements or EAs.

For historical reasons, a lot of those EAs come due for renewal in the fourth quarter of Microsoft’s fiscal year, which ends June 30.

So what could be happening is that negotiations for some big EAs came down to the wire, but ended with the companies re-signing for another three years. News of these deals might be coming out.

The company has actually talked about this before. For some reason, in 2009, its fiscal year ended on June 30, three days before its Q4 sales cycle ended on July 3. The company claimed that it closed a lot of deals in those last three days, which made its Q4 earnings look worse than they actually were.

Of course, it could be something completely different.

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