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MSFT Down As Market Finds Footing
The market is mixed today as investors process positive economic news and earnings. Shares of MSFT are down after having opened up with the rest of tech. 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 9x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.Yahoo Deal Is Paying Off, Bing Is Gaining Share (The New York Times)
It may be impossible for Microsoft to catch up to Google in search, but it still keeps trying. And last month Microsoft made some headway growing to 11.8%, up from 11.5% share the previous month. Bing now has 90 million users, up 48% since its launch. And the Yahoo search deal is paying off. Combined, Bing had 28% of the market. Business Insider’s Matt Rosoff believes the quality of Bing results is improving as it now has access to more than twice as much real-time data.
Kinect Blowing iPad Sales Out Of The Water Is A Good Psychological Win For Microsoft (CNBC)
Kinect has sold more than 2.5 million units since its launch. Should investors be buying shares of MSFT? Jefferies & Co. says: Yes. The analyst raised holiday quarter estimates for the company to $19.1 billion and $0.69/share. A $600 million and $0.03/share hike based solely on the strength of Kinect. Kinect is selling at 2.5x the rate of the iPad and is “an important psychological win for Microsoft.” That’s good for something, right?
In Order to Not Embarrass Themselves, Microsoft Should Do The Following For Tablets (eWeek)
Microsoft plans to reveal a new line of Windows 7 tablets during January’s Consumer Electronic Show. In order to be a viable player in this category, the company will have to do the following: 1) check the processor – tablets might require an entirely different class; 2) figure out how to port Windows Phone 7 apps into Windows proper;) optimise for touch (those buttons look terribly small); and 4) look no further than Windows Phone 7. That system integrates many of Microsoft’s existing assets, including Xbox and Zune, into a seamless package.
Microsoft’s Dividend Payout Remains The Same (The Wall Street Journal)
Microsoft is keeping its quarterly dividend steady, at $0.16/share, despite increasing investor demands that the software giant do something to boost its anemic share price. The company’s shares, once emblematic of fast-growing technology companies, have languished in the $20 range for the better part of a decade. When Microsoft adjusts its dividend, it does so only once a year, and the most recent adjustment was last quarter.
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