The Microsoft Investor is a daily report from SAI. Sign up here to receive it by email.
MSFT Up With The Markets
The markets are edging higher for the second day despite economic fears and new housing data showing that new home sales hit a 5-month low. Shares of MSFT are up with the rest of tech. Upcoming catalysts include the company’s Analyst Day at its new developer conference (BUILD) on September 14; Windows Phone 7 / Mango rollout and adoption with hardware partner Nokia (see below); strides against current market leaders in cloud computing; any entrance in the tablet market; making money in the online business, including integration of Skype and improving the search / display business; and continued evolution of Kinect and next generation Xbox console. The stock currently trades at 6.7x Enterprise Value / TTM Free Cash Flow.Microsoft Gets Into Group Messaging As Skype Buys GroupMe (VentureBeat)
Skype entered into a definitive agreement to acquire GroupMe, a New York-based startup that offers a free group text messaging and conference call service on mobile phones. The deal could ultimately give Microsoft a much needed boost in the smartphone market with the entrance into the market largely dominated by Research In Motion (BBM) and Apple (iMessage) and SMS. Launched last year, GroupMe lets users create private phone groups, send text messages throughout the group, and set up free conference calls. Here’s a Business Insider exclusive on how the GroupMe founders sold.
Microsoft Executive Comes To The defence Of Personal Computers (AppleInsider)
A Microsoft executive has spoken in defence of the PC, insisting that the industry is in the “PC plus” era, rejecting the label of “Post-PC.” According to Microsoft’s Corporate Communications VP Frank Shaw, new devices such as eReaders, tablets and smartphones “aren’t PC killers, but instead are complementary devices.” He maintained his defence of Windows saying computers were “rapidly and dramatically” improving on what these and other mobile devices were doing, but only PCs were doing a good job of creating content and collaborating with others. That’s great and all, but Microsoft doesn’t make PCs.
Windows Still Has Dismal Smartphone Market Share (The NPD Group)
According to NPD Group, Google’s Android operating system continues to dominate U.S. smartphone market share, accounting for 52% of units sold in the second quarter. Like Android, Apple’s iPhone OS (iOS) experienced a slight quarterly gain, rising to 29%. BlackBerry OS share fell to 11%, as Windows Phone 7, Windows Mobile and WebOS held steady at less than 5% of the market each. There’s only up from here, especially with Nokia.
Mango Is Ready To Ship, It’s The OEMs Who Are The Bottleneck (TechCrunch)
Microsoft’s Nordic mobile leader Peter Wissinger revealed that phone makers now had Windows Phone 7’s Mango update was now contingent only on their partners. While the company had already said it was finished early (a rarity in the tech world), Wissinger said that it was now only “up to our manufacturing partners” to actually ship their devices. Just because Microsoft finished Mango a bit early doesn’t mean that its OEM partners are ready to go. But way to throw them under the bus.
Daily Trader: State Street Thinks Microsoft Is A Bold Buy (Seeking Alpha)
Microsoft is one of the cheapest technology stocks in the market. State Street owns 301.64 million (or 3.6%) shares increased its holdings by 4.41% in the last quarter; the largest transaction made by the company and the largest shareholder. As of Friday, Microsoft was trading with a low P/E ratio of 8.9x and a lower forward P/E ratio of 7.6x. The company offers a yield of 2.66%, and has a low PEG ratio of 0.85. Fair value estimated range for Microsoft is $40-46. Microsoft is deeply undervalued and at some point, sooner or later, the stock will catch up with the company.