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MSFT Up With Broader Markets
Shares of MSFT are on the up after signs of an improving housing market and an increase in wholesale prices cut through the recent doom and gloom. Upcoming catalysts include upgrade cycles of Office 2010 and Windows 7; any entrance into the tablet market; the launch of Windows 7 mobile; and any adoption of Azure, the company’s cloud computing play. The stock currently trades at 8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.
Another Analyst Hedging The September Quarter (Jefferies & Company, Benzinga)
Katherine Egbert at Jefferies & Co. has lowered her estimates and price target on shares of Microsoft in conjunction with recent reports of a summertime slowdown in PC sales. Specifically, she has lowered her estimates on Windows and the Business Division (MBD). To handicap for the September quarter PC weakness, she now estimates 10% year-over-year consumer PC growth versus 12% previously. She reiterates her Buy rating and revised price-target of $33.
Einhorn Snaps Up Shares Of Microsoft (The Wall Street Journal)
Greenlight Capital run by hedge fund manager David Einhorn has increased holdings in technology stocks but trimmed holdings in financial stocks for the quarter ending June 30. According to the most recent filings, Greenlight more than doubled its holding in Microsoft to 7.7 million shares at the end of June from 3.4 million as of the end of March. Einhorn was known for shorting shares of Lehman Brothers before it collapsed in September 2008. So far this year, Microsoft shares are down 20%.
Mr. Softie Has Lost Over $6 Billion Trying To Figure Out The Internet (ZDNet)
Microsoft’s Bing is gaining share (albeit slowly) and will continue to as Microsoft’s partnership with Yahoo kicks in. However, the financial hit from Microsoft’s Internet follies is incredible. The company’s online unit has delivered more than $6 billion in operating losses over the last eight years. Microsoft has delivered a profit here and there since it has been consolidating online results, however, these profits are few and far between. Perhaps Microsoft’s online investment has helped it with the transition to cloud computing somehow but as of now, the Internet is one big money pit for the software giant.
A Look At Dividends: Microsoft’s Ability To Keep The Cash Flowing (The Motley Fool)
Microsoft’s payout ratio seems to be above the peer average, which means prudent investors may want to look elsewhere for the most secure payment possible. That said, considering the fact that a 24.4% payout ratio is more than safe, and Microsoft pays a much higher dividend than the others, it may just be a best bet.
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