The Microsoft Investor is a daily report from SAI. Sign up here to receive it by email.
MSFT Down Against The Grain
Markets started the trading session strong and have since given back gains as initial jobless claims held above the 400K level, hinting that the economic recovery has lost some steam. Shares of MSFT are down over 50 basis-points versus a positive tech tape. Upcoming catalysts include fiscal third quarter earnings to be announced on April 28 at 5:30pm Eastern Time; entrance in the tablet market at some point; Windows Phone 7 adoption with hardware partner Nokia; strides against current market leaders in cloud computing; retooling the Bing / Yahoo! partnership for international launch; and continued momentum of Kinect and the next gen console. The stock currently trades at 8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.
Microsoft’s AdCenter Platform Delivering Less Relevant Ads Than Yahoo’s Old Platform
(Various via techDygest)
Yahoo blamed Microsoft for its declining search business, saying that last year’s deal to outsource search advertising had lowered revenue per search. The company will halt the rollout of the paid-search alliance with Bing into international markets until Microsoft can improve on the results per share in the U.S. Yahoo’s search business was tanking before the deal, now it’s just a disaster. So basically, Microsoft’s adCenter platform is delivering less relevant ads than Yahoo’s old platform.
Where Is Microsoft Headed With Windows 8? (Redmondmag)
Developing an operating system that can run on a tablet device isn’t going to be enough for Microsoft to sustain its general OS dominance. If Windows is to be a viable choice for consumers going forward, Windows 8 tablets will need to be just as reliable, efficient and advanced as the iPad and Droid tablets. Because consumers and businesses have such differing wish lists, Microsoft will have to come up with two very different designs for Windows 8. Think Windows 95 and 98 vs. Windows NT and Windows 2000. The future of Windows lies in the past.
New XBox Might Not Be Out Until 2014 (GamePro)
According to sources, the next Xbox and PlayStation consoles shouldn’t be expected until 2014. One insider believes that both companies are delaying to milk the current generation console as well as take time on to fill technology craters. It is rumoured Microsoft hasn’t yet decided on the hardware makeup of a new Xbox. The company’s board is struggling with launching profitably using current technology or launching a new console at a loss with heavy research and development.
DOJ Limit’s Microsoft Purchase Of Novell Patents (PC World)
Microsoft will not be able to keep patents it proposed to buy from Novell under an agreement with the U.S. Department of Justice. Instead, the sale will be permitted after a Microsoft-led consortium agreed to revise its deal. That consortium, which includes Apple, modified the terms of its acquisition to satisfy antitrust regulators worried about the impact on open-source software.
Daily Trader: Microsoft Wooing Baby Boomers With Dividend Strategy (MarketWatch)
Microsoft is hoping to appeal to older, slower-moving investors with its dividend strategy. Shares have shown few signs of life recently, despite a $40 billion stock buyback. That said, the company has doubled its quarterly dividend since 2005, to $0.16 per share noting that the so-called “Boomer” investors want a stable income yield in retirement, and that some have become disillusioned with bond funds due to their inverse relationship with interest rates.
Microsoft Donating Money And Resources To Startup America (CNet)
Microsoft and more than 10 other companies are kicking in a total of $400 million and resources to the Startup America Partnership, the White house campaign to promote high-growth entrepreneurship across the country. The companies will also provide services, training and other benefits that will go directly to entrepreneurs trying to get their ideas and businesses off the ground.