THE MICROSOFT INVESTOR: Why Microsoft And Nokia Have A Fighting Chance In The Smartphone Race

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MSFT Up With The Rest Of Tech
The market is up on a strong Fed Manufacturing report and despite Citi Group’s big earnings miss. Shares of MSFT are up with the rest of technology. 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 7.7x Enterprise Value / TTM Free Cash Flow.

Microsoft And Nokia Will Win A Piece Of The Smartphone Pie (Seeking Alpha)
Why? Because the iPhone is too expensive, Research In Motion can’t get the hardware or software right anymore and Android isn’t an enterprise solution. Enter Nokia with Windows Phone and the competitive advantages:

  • Windows ecosystem
  • Network contracts
  • Software
  • Security
  • Hardware
  • Low cost

I’m not sure I agree with any of that rationale, although Hillel Fuld, guest contributor at Business Insider, does. I do believe that if it executes well, Microsoft has a real chance of disrupting the market and taking a large slice of it in the process.

Will The Nokia Lumia 900 Set To Launch In March Be Priced To Succeed? (SlashGear)
The Nokia Lumia 900 will launch in March, but will it be priced to succeed? Based on previous LTE smartphones, $199.99 with a new, two-year agreement and mandatory 4G data plan seems most likely. But Nokia has been ambitious with its Lumia 800 pricing in Europe, undercutting Android and iOS rivals and negotiating decent subsidies with networks to make the phone more affordable. If AT&T slaps a $200 tag on the Lumia 900 it’ll lose a huge chunk of potential audience who might be willing to give Windows Phone a punt. Offer it for $100, however, and all of a sudden there’s a lot more appeal.

Skype Coming Soon To Windows Phone (SlashGear)
In an interview, Microsoft VP of products, Rick Osterloh, revealed that Skype on Windows Phone “will be coming out soon.” The original promise for this combination of Windows Phone and video chat via Skype came last year when Joe Belfiore, Director of Windows Phone, said the service would be coming late 2011. So much for that. The real deal Skype application may well be made for Windows Phone Apollo (a subsequent version), whenever that comes out. Perhaps better to launch in the good graces of your carriers and then back door them.

Search Advertising Getting More Efficient, Points To Successful Fourth Quarter
(Search Engine Land)

Good news for Bing (but even better for Google), four reports released this month by paid search giants Efficient Frontier, IgnitionOne, Marin Software and Covario all point to an overwhelmingly successful fourth quarter in 2011 for major search advertisers in a number of verticals. Across the board, overall search spend increased, as advertisers on the whole enjoyed an increase in impressions and click-through rates, while achieving a lower average cost per click. And marketers will spend likely between 15% and 20% more this year in the U.S. Similar growth is expected internationally; however, macroeconomic conditions in Europe will be a wild card.

The Misguided Popularity Of Dividends (Seeking Alpha)
Have companies like Cisco and Microsoft proven unable to invest their huge cash hoards effectively in recent years? Though both companies issue modest dividends, their standing amongst the best technology companies in the market have dropped considerably in recent years and it has shown in their stock performance of the last decade. But the question is, has the dividend really hurt either company or have both just mismanaged their operations considerably?