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MSFT Up With Markets
The markets are mixed in early trading, but are currently trading in the positive on news that Bank of America will increase dividends and share buybacks, and on falling oil prices. Shares of MSFT are trading up with the rest of tech. Upcoming catalysts include any entrance in the tablet market; Windows Phone 7 adoption with new partner Nokia; strides against current market leaders in cloud computing; gaining search market share with Bing / Yahoo! partnership (see below); and continued momentum of Kinect. The stock currently trades at 8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.Microsoft Mobile Platform Share Continues To Drop (comScore)
I didn’t think it was possible, but Microsoft, despite the launch of Windows Phone 7 in November, continued to lose mobile platform share. Users of Windows Mobile are clearly not upgrading to Windows Phone 7, but switching platforms altogether. According to comScore, Android captured the leading ranking among smartphone platforms in the U.S. for the first time in January with 31.2% market share. RIM dropped to second place with 30.4% market share, followed by Apple with 24.7%, Microsoft with 8% and Palm rounded out the top five with 3.2%. Read more from Matt Rosoff at Business Insider.
Xbox 360 Top Console In February, Price Cuts Coming In June (CNet)
Wedbush analyst Michael Pachter estimates that Nintendo likely sold 305K Wii units in the U.S. in February, down 23% year-over-year. Sony’s PlayStation 3 saw a sales decline by 14% or 310K units. The top spot for February goes to Xbox 360 at 385K units, or a 9% decline. He also believes that Microsoft will announce a Xbox 260 price cut at this year’s E3 Expo in June, with competitors following suit.
Xbox Getting New Team Of Developers For Next Gen Console (Game Rant)
The original Xbox 360 launched in November of 2005. Based on recent job postings, it seems Microsoft is getting ready to move on to bigger and better. The positions offered vary, but they all seem to focus on development of the next-gen Microsoft console. Based on the fact that they’ve only begun hiring now, it’s safe to say that we a ways off from seeing anything come to market.
Microsoft Not Launching Tablet Until 2012 (BusinessWeek)
Microsoft is hoping to have Windows 8 tablets available in time for the back to school season. For 2012. That will be nearly two and a half years after Apple released the original iPad, creating the “post-PC” market. Matt Rosoff at Business Insider points out that while that seems incredibly slow, it’s actually a year faster than Microsoft responded to the iPhone. Microsoft has had a come-from-behind strategy that’s working in search and could eventually pay off in mobile. But will it work for tablets?
Ballmer Paid Big Bucks To Keep Nokia Away From Google (BusinessWeek)
Microsoft will pay Nokia more than $1 billion over five years to help develop and promote Windows-based handsets as part of the recent smartphone software agreement. Nokia will pay Microsoft a fee for each copy of Windows used in its phones which is rumoured to be under $15. At that rate, Nokia will have to sell 60 million phones, which is more than doable (unless the company completely falls apart). At $1 billion, one could argue that Microsoft got quite the deal for effectively buying Nokia whose market cap is 30x that figure. Read more at Business Insider.
Daily Trader: Value Investors Still Love Microsoft (Forbes)
Poor Microsoft. While its pioneering days are long gone, value-minded investors love Microsoft more than ever, starting with Microsoft’s incredible shrinking price-to-earnings ratio. The company’s stock is trading at a mere 10.4x this year’s earnings. Next is the $5/share in cash the company is sitting on. Subtract Microsoft’s cash-per-share from its stock price before dividing by its earnings and the stock is trading at more like 8.5x.
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