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MSFT Up With Market
The market is up on the news that retail sales blew away expectations with a 1.2% gain, and despite Best Buy’s miserable Q3 earnings report this morning. Share of MSFT are up about 1.5%. Upcoming catalysts include any entrance into the tablet market (even just as an operating system); Windows Phone 7 adoption; strides against current market leaders in cloud computing; holiday sales of Kinect; and continued upgrade cycles of Office 2010 and Windows 7. The stock currently trades at 8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.Microsoft Needs To Buy Support Of Leading Mobile Handset Manufacturers To Succeed (All Things Digital)
There’s another turf war brewing in the mobile space over the top smartphone manufacturers, says Charlie Wolf of Needham & Co. He believes that Microsoft must sign-up the name brand smartphone vendors to make WP7 a success. And Mr. Softie knows it. Which is why it’s putting so many marketing dollars into Windows Phone 7. Charlie believes that Microsoft will devote a material portion of the company’s marketing budget to buy support of leading manufacturers.
Kinect Will Boost Microsoft Revenue By $1.2 Billion In First Year (Forbes)
Caris & Co. analyst Sandeep Aggarwal says that Kinect should provide at a least a $1.2 billion boost to Microsoft’s top line in the first year, or about $2 billion in gross revenue for the Kinect ecosystem, including software. Kinect benefits Microsoft in four ways:
- Material attach rates for Kinect among the 45 million Xbox installed base
- Driving higher adoption and market share gains for Xbox in the console segment
- Uptick in the sale of new game titles.
- Kinect should reduce attrition and boost new subscriber growth for Xbox Live
Microsoft has a hit in its hands with Kinect, the new motion recognition controller for the Xbox 360.
Microsoft Is Hosed Next Year According To Goldman Sachs (Business Insider)
Goldman Sachs analyst Sarah Friar continues to be bearish on Microsoft predicting that the company’s revenue growth would slow from 12% in 2010 to 7% in 2011. Friar singled out Microsoft’s lack of tablet response as a reason for her pessimism. Microsoft still doesn’t have a dedicated tablet product group, although the Windows team is reportedly working on making the next version of Windows better suited for touch screens (probably not out until 2012). Friar also said that early Windows Phone 7 results gave no indication that Microsoft would increase its smartphone market share above 10% any time soon.
Cloud Computing Will Benefit Google, Not Microsoft (Seeking Alpha)
Cloud computing is really nothing new; perhaps maybe a name for the method of accessing computer files remotely. Scott Wachsler, contributor at Seeking Alpha, believes that is not going to add any great increase to the current value of Microsoft. The company that will gain the most is Google from the Docs business. Accordingly, he thinks new investors in Microsoft are going to be sitting underneath a bit of a dark cloud for the foreseeable future.
Microsoft Looks To Outpace Salesforce In CRM (Bloomberg)
Microsoft aims to attract more users to its CRM (customer relationship management) software in 2011 than Salesforce.com and outpace its competitors in that market for the first time, according to Michael Park, Vice President of Microsoft Business Solutions. The new version of the software will be available in 40 countries whereas last year it was only available in the U.S. and Canada. Last year, however, Salesforce gained about 50,000 more new users than Microsoft. Read Business Insider’s Matt Rosoff’s report of how Microsoft is paying Salesforce customers to leave.
Microsoft Looking To Invest In Twitter? (San Francisco Business Times)
Microsoft CEO Steve Ballmer had breakfast with Twitter CEO Dick Costolo, sparking speculation about what sort of deal the two might be contemplating. Microsoft could alleviate financial pressures for the high profile startup who is rumoured to be in the middle of raising a monster round. Coincidentally, Microsoft Senior Director of Corporate Strategy and Acquisitions Fritz Lanman confirmed this week that Steve Ballmer tried to acquire Facebook years ago. they’ll just have to be content with their $250 million investment which is looking like it’s paying off.
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