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MSFT Sideways As Market Processes News
The market is conflicted this morning as incredible profits from equipment maker Caterpillar are contrasted by a more than anticipated rise in jobless claims. Shares of MSFT are also trading sideways with the rest of tech. Upcoming catalysts include holiday quarter earnings results announced after the close today; entrance and uptake in the tablet market (a ways off); Windows Phone 7 adoption (2 million units so far); strides against current market leaders in cloud computing; and continued momentum of Kinect as well as other uses for the technology. The stock currently trades at 9x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.
Encouraging Earnings Expectations, But Big Questions Ahead For Microsoft (Datamation)
The past two decades have been a study in contrast for Microsoft. After a meteoric rise propelled by the near-ubiquitous distribution of its Windows platform, Microsoft continues to be immensely profitable. Yet despite a series of record earnings performances, the company’s stock has barely moved. Traditional cash cows aside, analysts are looking for signs that Microsoft will be able to thrive in an era when tablets and smartphones are increasingly supplanting the traditional PC as people’s preferred computing device.
Microsoft Sells 2 Million Units Of Windows Phone 7 OS (The Wall Street Journal)
Microsoft said it sold two million copies of its new Windows Phone 7 operating system last year, a figure neither high nor low enough to declare the product a success or failure. The one thing the company was focused on was producing a phone that people loved. With a 93% satisfaction approval rate, they’ve done just that. Not bad, but Google activates 300,000 phones on a daily basis. And Apple said it shipped 16.2 million iPhones last quarter. Read more from Jay Yarow at Business Insider.
What A Difference A Year Makes, Microsoft Is Expected To Report Lower Profit (Reuters)
A year ago, Microsoft blew away Wall Street’s earnings forecasts with blistering sales of its new Windows 7 OS and trumpeted optimism about the recovery in tech spending. This year, not so much. The company is set to report lower profit as PC sales growth fizzles, and it struggles to convince investors that it can grab a foothold in the fast-moving mobile and tablet markets. Microsoft is expected to report profit of $5.93 billion or $0.68 / share on revenue of $19.2 billion.
Apple’s Profit Could Top Microsoft’s For The First Time In 20 Years (AppleInsider)
Microsoft is expected to report lower profits than last year as PC market growth stalls, making it almost certain that Apple’s latest $6 billion earnings record will exceed Microsoft’s estimated $5.93 billion earnings. This would mark the first time since 1990. That’s gotta hurt. Especially, when you know you essentially saved your enemy from imminent death with a $150 million investment in 1997. It’s like U.S. foreign policy.