Microsoft's share price spiked after a US hedge fund took a $2bn stake in Microsoft, and called for Redmond to make Office available outside of Windows.
According to reports, Jeffry W Ubben, founder of ValueAct Capital Management, announced the stake yesterday, saying Microsoft's enterprise business was undervalued.
While declining PC sales may pose a threat to Microsoft's desktop Windows business, Ubben sees potential in Microsoft's Azure cloud services, currently trailing market leader AWS, and its server and database platforms for the enterprise.
Within three to five years "Microsoft could be the largest cloud company in the world," Ubben said, according to the Wall Street Journal.
"It is a dominant software company... and in the long term it will win out," he added.
ValueAct's decision to take a stake in Microsoft is interesting given the company likes to gain significant ownership in a small number of businesses that it perceives are undervalued. As ValueAct states on its website, the goal in each investment is to influence the strategy of its target's management or board to maximise returns for shareholders.
According to Thomson Reuters data, based on Friday's closing price of $29.77, ValueAct's stake would make it one of Microsoft's top 15 investors. However, it's not clear that where its one percent stake is large enough to hold signifcant influence over the company.
Ubben said he will not publicly campaign to influence Microsoft's strategy, but did add he believes Microsoft should make Office available beyond Windows.
Microsoft has so far resisted supporting Office on Apple's iPad and Android devices, which instead can use OneNote.
According to some analysts, supporting the iPad alone could raise $2.5bn — more than Microsoft would gain if Windows 8 took an 11 percent share of the tablet market.
While Apple's 30 percent commission is reportedly preventing Microsoft from selling Office licences through the App Store, the company is also moving towards a subscription model with Office 365, which ZDNet's Ed Bott recently noted would not incur Apple's fee.
Microsoft said in a statement: "Microsoft's board of directors and management team welcome the perspectives of shareholders. We are committed to enhancing value for all shareholders, and will continue to take actions that we believe will enable us to achieve this objective."