The Microsoft Investor is a daily report from SAI. Sign up here to receive it by email.
Matt Lynley, Business Insider
MSFT Up Slightly While Tech Falls
The market is down on bad data including a spike in initial jobless claims and retail sales missing by a mile. Shares of MSFT are up marginally while the rest of tech falls. Upcoming catalysts include second fiscal quarter earnings results on Thursday, January 19th at 5:30 p.m. ET; Windows 8 next year; entrance into the tablet market; Windows Phone 7 adoption with hardware partner Nokia (see below); strides against current market leaders in cloud computing; 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. The stock currently trades at 7.6x Enterprise Value / TTM Free Cash Flow.Nokia And Microsoft To Shipped 37 Million Phone Units This Year (All Things Digital)
Morgan Stanley expects shipments of Nokia’s new Windows Phones to hit 37 million units in 2012, and 64 million units in 2013. Add to this Morgan Stanley’s estimates for HTC’s Windows Phone handsets, and you get shipments of 43 million this year and 74 million the next. And that’s just those two OEMs alone. There are a few others for which the research house doesn’t provide estimates. Samsung, for example. Pretty good, considering Microsoft’s smartphone efforts to date.
Microsoft Overtakes Yahoo! As Second Largest Search Engine (comScore)
Microsoft has finally done it. It can officially claim to be the number two search engine in the U.S., according to comScore. Bing and other websites fielded a total of 2.75 billion search requests in December last year, compared to 2.65 billion search requests handled by Yahoo, representing market shares of 15.1% and 14.5%, respectively. As search partners, they account for nearly 30% of the search market. That said, Microsoft is still burning $2+ billion a year in losses and the move had no effect on Google, which processed 12 billion search requests during the month, or market share of 65.9%.
Microsoft Wins Another Big Android licence Deal (Business Insider)
Microsoft has won another patent fight with Android. The company reached a patent agreement with LG covering tablets, smartphones, and other devices with Android or Chrome. Microsoft has been getting deals with many Android hardware partners. In September, Goldman Sachs estimated Microsoft was bringing in $444 million annually from Android patent deals.
Microsoft Could Be Making Hundreds Of Layoffs To Compete Against Rivals (Bloomberg)
Microsoft is revamping its marketing strategy and may lay off hundreds of employees as a result. The changes would eliminate overlap in job responsibilities and will be overseen by Chris Capossela, who took over as the company’s chief marketing officer last year. Steve Ballmer is concerned that the company isn’t getting enough bang for its marketing buck, and is worried about threats to Microsoft’s core enterprise business from newcomers like Google, Apple and Amazon. It’s easy to see why he might be worried. Apple is estimated to make $10 billion in enterprise hardware sales in 2012. That’s up from zero five years ago.
Microsoft’s Internet TV Subscription Plan On Hold (Reuters)
Microsoft has been kicking the tires on launching a paid TV subscription service through Xbox Live. But after seeing how expensive it would be to licence content, the company has decided to hold back. Microsoft has held talks with media executives for more than a year about the service, but when they saw the rates for licensing popular shows, they realised it would be way too expensive for the service they envisioned. Once again, this shows that tech companies cannot just lightly decide to take on the TV space.
Ballmer Isn’t Leaving Anytime Soon (Business Insider)
For investors hoping to see Steve Ballmer start to transition away from leading Microsoft after Windows 8 ships later this year, we have some bad news. Back in 2008, he said in a public speech that he wants to stay on until his youngest kid is in college, which would be 2017 or 2018. Three years later, despite a rough patch of business in 2008 and 2009 and some calls from investors to step down, he has not changed his mind, says this person. Ballmer serves at the pleasure of the board, but this person says he has the 100% trust of Bill Gates, and as long as Gates is chairman, he won’t ask Ballmer to leave.