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MSFT Up Marginally
As the market gets a lift from favourable earnings, shares of MSFT are up only slightly. Microsoft will announce second quarter earnings after the market close on Thursday, July 22. The company remains in a challenging spot as the world moves away from PC-based computing toward cloud and mobile computing. Catalyst include the company’s upcoming analyst day on Thursday, July 29 and upgrade cycles of Office 2010 and Windows 7. The stock currently trades at 12x 2010E P/E, inexpensive compared to historical trading multiples, but Microsoft’s rapid growth days are likely behind it.
Microsoft Only Needs 10% More Market Share To Break Even (Goldman Sachs, Barron’s)
In comScore’s June search results, according to Goldman Sachs Microsoft analyst Sarah Friar, Microsoft’s Bing continued to post solid gains with a 55 basis-point (bp) increase in its market share to 12.7%. Since its launch in May 2009, Bing’s market share has improved over 460 bp from 8.0%. She believes that Microsoft will continue to build on these gains to form a strong presence in the online advertising market, a potentially needle-moving success for the company. The company estimates that a 20%-25% share of U.S. searches could result in break-even performance.
Microsoft Office 2010 Upgrade Cycle Might Be A Flop (Seeking Alpha)
Microsoft will have an upgrade cycle for Office 2010, but it might take a while. Microsoft’s software assurance licensing (buy rights for future upgrades) is the biggest support of upgrades, according to Forrester Research. Microsoft’s potential Office conundrum:
- Forrester’s survey of 110 IT execs found 60 per cent of respondents are very or extremely satisfied with Office 2003 and 2007.
- Only a quarter of customers keep up with Microsoft’s 3-year Office upgrade cycles and 60 per cent still use Office 2003.
- Support and file compatibility drives upgrades as much as new features.
In other words, this upgrade cycle might not be as strong as the company is hoping for and desperately needs.
Ballmer Bets On The Cloud, Tablet PC And Mobile; Welcome To The Game Steve (The Motley Fool)
While laying off hundreds of employees, Steve Ballmer is betting on three areas for the near-term future of his company: cloud, tablets, and phones. Considering the company hasn’t done much for cloud, and Courier has been put to bed and Windows 7 isn’t on the consumer radar, I’m a bit weary.
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