Tech Stocks This Week: Microsoft’s Acquisition, DocuSign’s Stellar Quarter, and More

Tech companies made some big headlines during the week. After software-giant Microsoft (NASDAQ: MSFT) kicked off the week with an announcement of a major acquisition, other interesting news in tech included Apple‘s(NASDAQ: AAPL) supply-chain rumors and DocuSign‘s (NASDAQ: DOCU) impressive quarterly results for its first reported quarter as a publicly traded company. Here’s a look at what investors should know about each of these tech stories.

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Microsoft bets on open-source software development

On Monday, Microsoft announced it had reached an agreement to acquire open-source software development platform GitHub for $7.5 billion worth of Microsoft stock. With 28 million developers coding openly on GitHub, the acquisition signals Microsoft’s bet both on the expectations of growth in programming and an open-source future.

“Microsoft is a developer-first company, and by joining forces with GitHub we strengthen our commitment to developer freedom, openness and innovation,” said Microsoft CEO Satya Nadella in a press release about the acquisition. Microsoft also said GitHub will operate independently: “Developers will continue to be able to use the programming languages, tools and operating systems of their choice for their projects — and will still be able to deploy their code to any operating system, any cloud and any device.”

GitHub has estimated annualized revenue of about $300 million, so it’s tough to justify the deal’s $7.5 billion value. But Microsoft believes it can help scale GitHub’s business, which is already growing rapidly.

Ignore these supply-chain rumors

Shares of Apple fell as much as 2% in premarket trading on Friday following a report from Nikkei Asian Review saying Apple told suppliers to plan for 20% lower component orders for iPhones this year compared to last year. This news surfaced at the time when Apple is usually lining up suppliers for its annual fall launch of new iPhone models, so this news spooked some investors. But Apple stock recovered some of its premarket decline during the trading day, with shares finishing Friday down only 0.9%.

Investors should be cautious about reading things into Apple’s supply-chain rumors. Given the company’s sprawling global network of suppliers and the variety of different iPhone models Apple keeps in its product lineup even as it launches new iPhones, predicting iPhone sales based on supply-chain rumors is a difficult — if not impossible — task. Indeed, Apple CEO Tim Cook has specifically warned investors not to read anything into supply-chain rumors.

DocuSign

DocuSign soared 37% on the day of its initial public offering in April, and investors have big expectations for the e-signature and cloud-based document company. The company already is proving bullish investors right as it reported a stellar first quarter of fiscal 2019, which sent shares about 3.5% higher on Friday.

For DocuSign’s first quarter, revenue jumped 37% year over year, to $155.8 million. In addition, DocuSign’s non-GAAP gross profit margin notably improved from 78% in the year-ago quarter to 80% in its first quarter of fiscal 2018.

DocuSign CEO Dan Springer cited the company’s international business, where it saw “strong growth, expansion and development,” as a key driver of revenue growth. DocuSign’s international sales increased 52% year over year during the quarter.

Shares have nearly doubled DocuSign’s IPO price of $29.

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Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

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