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MSFT Bucking The Trend
The market is off in early trading as oil prices continue to sit around 30-month highs and new developments surrounding the European debt crisis sparks renewed concern. Shares of MSFT are in positive territory versus a relatively flat tech tape. Upcoming catalysts include first calendar quarter earnings released the third week in April; any entrance in the tablet market; Windows Phone 7 adoption with hardware partner Nokia; strides against current market leaders in cloud computing; gaining search market share with Bing / Yahoo! partnership; and continued momentum of Kinect. The stock currently trades at 8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.Microsoft And Nokia Plan On Selling A Boat Load Of Phones In 2012 (Reuters)
Talks between Nokia and Microsoft on a software deal are on schedule. Meaning a large number of Nokia Windows phones should be sold in 2012. The companies signed a non-binding agreement on February 11 for Nokia to start using Microsoft software as its main platform in smartphones. Some analysts have said talks should be concluded by end-April when Nokia plans to start talks over job cuts stemming from the agreement (if I was on a Symbian development team, I’d be worried).
Nokia Smartphones Powered By Microsoft Will Equal Trouble For Apple (The New York Times)
Nokia remains the largest phone manufacturer in the world, and it has no equal in building handsets inexpensively. Last year, it sold more than 452 million phones, including 100 million smartphones. Microsoft launched WP7 in the fall last year and by year end had 5,000 apps in its store, a milestone reached 3x as fast as Google’s Android. Symbian is the second largest smartphone platform in the world at 20.9% with WP7 at 5.5%. That spells trouble for Apple’s 15.7% share.
While Too Big, Microsoft Has Classic LBO Characteristics (Seeking Alpha)
Microsoft’s share price has been flat for years. At this point, the company could represent a compelling bargain. While likely too big for a leverage buy out (LBO), the company has all the classic signs for private equity: strong moat, consistent cash flows, great return on invested capital (51%), and a cash rich balance sheet.
Brain Drain: And The Saga Continues (All Things Digital)
After it struck its online advertising and search partnership with Yahoo!, Microsoft tapped longtime Internet executive Brett Wayn to work on integration. Wayn must have liked what he saw at Yahoo!, since he is bouncing there from his Microsoft job. He will help run local efforts at Yahoo.
Daily Trader: Microsoft Among Top Tech Investments (Seeking Alpha)
Based on dividend yield, low debt and attractive valuation that is. With a 2.5% yield, an EV/EBITDA ratio of 6.3x, and a TTM P/CF ratio of 9.2x, its valuation and yield look appealing. The company also reported a year-over-year revenue growth of 6.9%. The company has fallen further behind in the high-growth markets likely to represent the next generation of personal computing, but it’s definitely a stock to watch.
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