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MSFT Flat As Market Struggles
Shares of MSFT are trading sideways as the market tries to process the lowest consumer confidence numbers since February. Upcoming catalysts for the stock include the company’s analyst day this Thursday, July 29 and upgrade cycles of Office 2010 and Windows 7. The stock currently trades at 13x 2010E P/E, inexpensive compared to historical trading multiples.Microsoft Finally Showing Signs Of Taking On The iPad (Goldman Sachs)
Microsoft and ARM announced a multi-year agreement where Microsoft will licence the ARM architecture for a chip design. Sarah Friar at Goldman Sachs believes the agreement is an indication that Microsoft is willing to work with non-Intel processors to address tablet and smartphone opportunities. She believes the tablet market will have a significant long-term impact by cannibalising notebook/netbook sales over time. As Microsoft has not had an answer to Apple’s iPad thus far, its success has created questions around the dominant position of the Windows franchise, as well as a significant overhang on the stock. Friar reiterates her Buy rating on MSFT shares.
It’s All In The Headline (Various)
Wall Street analysts try and come up with clever headlines or titles for research reports to differentiate themselves and entice investors to actually read them. Here are a few zingers post-Microsoft’s earnings:
- Credit Suisse: What More Do You Want?
- JP Morgan: Solid Results; Another Cheap Stock
- RBC Capital: No Signs Of Softness Here
- Deutsche Bank: Hitting on all cylinders; Reiterate Buy and $35 PT
- Morgan Stanley: Q4 Ends FY10 with Authority and FY11 Looks Even Better
- Jefferies & Co.: Microsoft Delivers a Sizzling Summer Quarter
- Goldman Sachs: Another beat; Product cycles in full swing; reiterate Buy
You get the picture.
Whitney Tilson Stepping In to Defend Mr. Softie (Market Folly)
The rumours of Microsoft’s demise are greatly exaggerated according to T2 helmer and stock picking wizard Whitney Tilson. He believes the stock is cheap at these levels and is poised for strong upgrade cycles with both Office and Windows and sees Microsoft as being one of the dominant players in emerging mobile markets. He is also a buyer of InBev (BUD) and BP. Click here to see the full report.
Compare Microsoft To Oracle, Not Apple Or Google (Seeking Alpha)
Dennis Byron takes a deeper look at the recent New York Times article suggesting that investors compare Microsoft to Oracle instead of Apple and Google. He questions several of the steps that get to that conclusion. First, at the root of Microsoft’s business is the enterprise. Second, Microsoft’s consumers are not the consumers themselves but Dell and HP which house consumer software. Get it right people.
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