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MSFT Off With Market
Markets are down as January retail sales came in mixed and Greece fears continue to weigh on investors. Shares of MSFT are off with the rest of tech. Upcoming catalysts include Windows 8, Windows Server 8, Office 15 and Windows Phone 8; expansion in the smartphone market with primary hardware partner Nokia; strides in cloud computing; profitability in the online business, including integration of Skype; and continued evolution of Kinect and next generation Xbox. The stock currently trades at 8.2x Enterprise Value / TTM Free Cash Flow.
The Next Xbox May Have Touchscreen Controllers (CVG)
According to Xbox World Magazine, Microsoft’s next-generation Xbox will use controllers that have “an HD screen surrounded by the traditional 360 buttons and sticks.” The new controller can also be used as a remote control when watching TV, a browser for the Internet or for extra buttons while playing a game. The next generation console may be 6x more powerful than the current Xbox, however launch date is not known. Not likely this year. The publication speculates that the console could be priced over $600.
Microsoft Still Sees Room For Windows 7 Even After Windows 8 Launches (Business Insider)
For enterprises, Microsoft still thinks there’s plenty of upside in selling Windows 7, even after Windows 8 is out. Windows 7 has been a big hit in the enterprise. One-third of business PCs have upgraded since it was released in late 2009. But that means that two-thirds have not. On April 18, 2014, Microsoft will “end of life” Windows XP, setting a hard deadline for these customers to upgrade to Windows 7. Once those Windows 7 computers are in place, Microsoft can try to sell Windows 8 upgrades.
Here’s How Microsoft Could Sell A Ton Of ARM Tablets To The Enterprise (Business Insider)
Microsoft has not yet laid out its plans for how to charge enterprises for Windows ARM devices. If Windows 8 on an ARM tablet is considered a “fully functional OS” and not an “embedded OS” then an upgrade to it would be covered by the EA licence. A company with a recent EA could swap out other Windows devices with the tablet and be squared away. If a company yanks out its Windows desktops and replaces them with iPads that are set up to be able to run Windows and Office apps, Microsoft charges a “Virtual Desktop Access” fee for each device. Might not be worth it.
The Three Big Risks To Microsoft (Seeking Alpha)
There are three risks that could limit the shares over the next year:
- Headline and implementation risk to Windows 8
- Continued weakness in core business and earnings growth
- Lack of innovation
A surge of 14.4% in the last three months and breaking the critical $30 reference, investors should watch for warning signs in performance.