THE MICROSOFT INVESTOR: Will The New WP7 Mango Help Microsoft Catch Up To Apple And Google?

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Ellis Hamburger

MSFT Flat In Mixed Market 
Stocks are mixed in morning trading as as oil prices rise against an unexpected rise in single-family home sales, offering some hope for the stagnant housing market.
Shares of MSFT are relatively flat going into today’s Mango launch (see below). Upcoming catalysts include entrance in the tablet market; Windows Phone 7 adoption with hardware partner Nokia; strides against current market leaders in cloud computing; making money in the online business including integration of Skype and improving the search business (retooling the Bing / Yahoo! partnership or just buying them outright); and continued momentum of Kinect and the next generation console. The stock currently trades at 8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.Coverage Of Microsoft’s Launch Of Mango (Business Insider)
Catch up with commentary and analysis from today’s event.

Windows 8 Could Be Previewed As Early As Next Week (Business Insider)
Windows chief Steven Sinofsky will appear at the D: AllThingsDigital conference next week, and the odds are that he’ll use the high-profile event to give the public its first view of Windows 8, the next version of Microsoft’s operating system. Based on past Windows release cycles, the mainline version of Windows 8 probably won’t ship until late 2012 at the earliest.

Bing Director Understands The Shortcomings Of Search, Probably Won’t Help Bing (eWeek)
Microsoft Bing Director Stefan Weitz has been saying the same thing for years: traditional Google search is failing, or at least has become less effective. How long can Weitz and Bing claim Google’s system is old-fashioned before people actually listen to them and buy into Bing’s decision engine premise? Weitz has the wrong platform and brand. Microsoft online service provider brand sucks, which is a big reason why it hemorrhages money every year. When Weitz finally goes somewhere where he can make a bigger impact, Bing will be a thing of the past.

How Is Microsoft Going to Create Excitement For Mango Without Killing WP7 Demand? (ZDNet)
Microsoft CEO Steve Ballmer is gearing up for today’s Mango preview event, promising the next Windows Phones will sport more than 500 new features in an attempt to compete with Apple and Google. Generating that buzz is great and all, but questions remain: 1) enterprise-focused features and 2) why buy an adequate and unexciting WP7 handset when I might be able to pick up a more-up-to-date one running Mango in five or six months? And running on a Nokia smartphone no less.

Microsoft Is A Wasteland For Investors… (Seeking Alpha)
There are a set of tech companies that become investing wastelands for investors looking to build above average returns for their portfolio. Take Microsoft for an example. An investor who bought the stock back in 2001 is actually experiencing a loss in the stock. The company has raised its dividend over the years, but not nearly enough to compensate for loss on the stock, dollar devaluation and inflation. If you are a dividend investor there are better places to park your money with relatively equal risk. Verizon for one.

…But Could Be The Dividend Stock To Own (Seeking Alpha)
Microsoft is a highly profitable company whose shares are trading way below the historical P/E ratios. During the last 10 years, profits have gone higher and higher but the stock is still trading almost 60% lower than its peak level. It is time to forgive Microsoft for its past sins. The company’s current yield of 2.59% is highly sustainable. That is why it should be considered among the dividend stock picks for the next 5 years (contrary to the article above).