The Microsoft Investor is a daily report from SAI. Sign up here to receive it by email.
MSFT Reversing Losses
As investors head into the short week, shares of MSFT are up marginally, reversing the recent downward pressure. Microsoft remains in a challenging spot as the world moves away from PC-based computing toward cloud and mobile computing. The next potential catalyst is the upgrade cycle 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.
Bearish Sentiment Overdone Says Analyst (Barrons)
CLSA Asia Pacific Markets analyst Ed Maguire launched coverage of Microsoft with a Buy rating and a $32 price target last week. He believes the company “is poised to benefit from the strongest series of product cycles in nearly a decade, as a rebound in consumer and corporate IT spending provides a strong tailwind.” He concedes that concerns over mobile-share loss and disruptive competition has weighed on the stock, but contends that the bearish sentiment is overdone.
Microsoft One of The Best Stocks To Own For The Second Half Of 2010 (The Street)
Microsoft is currently a low-risk stock. The tech giant is in no risk of losing its dominant perch anytime soon according to Richard Band, contributor at The Street. The stock looks incredibly cheap at only about 11X estimated earnings for the year ahead, half the P/E multiple it fetched three years ago. The 2.2% dividend yield is nothing to sneeze at either.
Google’s Knocking On Bing’s Vertical Search (The Wall Street Journal)
Google’s purchase of ITA Software could affect Microsoft’s travel vertical long-term. Microsoft uses ITA Software’s technology to include airfare pricing and availability information in Bing. Microsoft has touted Bing’s ability to provide accurate, up-to-date information on airfares as an important aspect that helps distinguish the search engine from competitors, including Google.
Microsoft Losing In Mobile Because Of Open Source (The New York Times)
Microsoft has completely lost its cool, according to the New York Times. The list of Microsoft’s consumer product slip-ups grows each year. And in mobile, the company is getting crushed by Apple and Google — the reason being that Microsoft has not embraced open source licence terms and conditions. Not so says Seeking Alpha; Apple’s not so open either.
Microsoft Needs A Wake-Up Call; Anyone, Anyone!? (The Street)
Microsoft’s tablet idea was a decade too early and has since died on the drawing board while Apple’s iPad is rocketing. The mobile phones don’t stack up to Apple’s iPhone or Google’s Android. And now the stalled travel business just got rear-ended with Google’s purchase of ITA Software. No wonder the stock is down 23% or three times that of the sagging NASDAQ.
Business Insider Emails & Alerts
Site highlights each day to your inbox.