Hi John, here's what you need to know for October 22nd in 3:14 minutes.

Last week, Finimize’s head honcho Max popped into Courier for a chat, where he discussed Finimize’s past, present and future. Listen now to learn how Finimize started out – and why the newsletter you love almost wasn’t a thing 🙀

⏳ Keep it brief

Cloudy With A Chance Of Profits

What’s Going On Here?

Europe’s largest tech company, SAP, officially announced a partnership with Microsoft on Monday – and some investors can smell dollars in the air…

What Does This Mean?

SAP, which makes business operations software, announced that its third-quarter revenue grew 10% compared to the same time last year, while its profits grew 15%. But given that the company released its preliminary results a couple of weeks ago, investors already knew which way the wind was blowing. The big news was the official announcement of a three-year cloud computing deal with Microsoft.

The deal (which has been in place for a while, just under the weather radar) will make it easier for SAP’s customers to move to Microsoft’s cloud platform – so they won't need to worry about costly server maintenance. SAP will benefit too: as part of the deal, Microsoft will resell its partner's cloud tools to its own customers.

Why Should I Care?

For markets: Fair-weather friends.
The Microsoft deal boosted SAP’s new cloud sales by 18% last quarter, and it’ll probably help SAP hold on to its current customers too. And this isn’t SAP’s only successful partnership: it’s also been working with Amazon’s and Alphabet’s cloud platforms (tweet this). Investors were on cloud nine, and sent SAP’s stock up 3% on Monday.

The bigger picture: The calm before the storm.
Investors were likely hoping SAP integration brings Microsoft customers too: its stock also rose. They’ll be looking at its cloud business performance closely when the software giant reports quarterly earnings on Wednesday – just as they will with Alphabet and, above all, Amazon. While Microsoft still makes a lot of money from selling Windows – and Alphabet from selling ads – Amazon relies on its cloud business for the majority of its profit. No wonder its investors are hoping it’ll beat Microsoft to secure a $10 billion cloud deal with the US Defense Department.

Feud, Glorious Feud

What’s Going On Here?

British medical equipment company Smith & Nephew lost its CEO on Monday. Please sir, he just wanted some more than the $6 million he was on…

What Does This Mean?

Smith & Nephew hired Namal Nawana in May of last year. But Nawana's previous job paid him almost double what he was going to make in 2019, and he’s spent the last few months arguing with the company about it.

British investors are notoriously reluctant to pay bumper salaries. Smith & Nephew did consider a move to the US (where executive pay tends to be higher) to keep hold of Nawana. But when that didn’t happen, he walked – perhaps in the hope some Artful Dodger might take a needy multimillionaire under their wing.

Why Should I Care?

The bigger picture: Who will buy?
Smith & Nephew’s stock fell almost 10% on Monday. That might be because the company’s stock rose 40% under Nawana, and there’s no guarantee a new CEO can achieve the same results. Not for a lack of incentive, mind you: as is often the case at big companies, pay is partly linked to the company’s profit and stock price. That might encourage the CEO to use the company’s money to buy back its shares – reducing the number of shares available, driving up the price and securing a tidy bonus. But some worry it makes them too focused on short-term returns, rather than positioning the business for long-term success.

For markets: I’d do anything.
German fintech Wirecard is another potential example of management looking out for number one. It’s been accused of inflating its customer numbers to make its profits look more attractive to investors – which would’ve benefited its CEO, who owns over 7% of its stock and is, in part, paid based on the company’s performance. Wirecard denies any wrongdoing, and on Monday appointed auditors to investigate the situation further. That sent its shares up more than 6% – but they’re still below where they were when the latest reports of the scandal broke last week.

💬 Quote of the day

– e e cummings (an American poet, painter, essayist, author, and playwright)