Rosenblatt Securities analyst Ryan Koontz said Microsoft's acquisition of Affirmed is a "competitive attack" on VMware (VMW). In a note to clients, Koontz said VMware "has invested very heavily in recent years in building its carrier virtualization product, services, and go-to-market portfolio targeting telco private cloud."
At first glance, Microsoft's Affirmed acquisition is a "head-scratcher," Koontz said. It's not an obvious fit with the Azure business, but it could shape the market for years to come, he said.
On the stock market today, Microsoft stock sank 4.1% to 149.70. It has held up better than most stocks during the coronavirus stock market crash. Microsoft stock has an IBD Relative Strength Rating of 94. That means it has outperformed 94% of stocks over the past 12 months.
Microsoft stock has an IBD Composite Rating of 98 out of a best-possible 99, according to the IBD Stock Checkup tool. The Composite Rating scores a stock's key fundamental and technical metrics against all other stocks regardless of industry group.
Microsoft's cloud-computing rival Amazon Web Services tested the market for telco network functions virtualization in recent years. But Amazon's (AMZN) AWS appears to have stepped back, Koontz said.
"Should Microsoft further build out its carrier NFV portfolio of products, services, and go-to-market through acquisitions and partnerships, we see a meaningful opportunity for them to gain the leading role in carrier virtualization, which remains up for grabs," Koontz said.