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MSFT Up With Market
Indices are up this morning, and so are shares of MSFT trading at close to 1% up. Upcoming catalysts include continued upgrade cycles of Office 2010 and Windows 7; any entrance into the tablet market (even just as an operating system); Windows Phone 7 adoption; strides against current market leaders in cloud computing; and holiday sales of Kinect. The stock currently trades at 9x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.Prepare for Windows 8 Minority Report Edition (The New York Times)
Microsoft is buying Canesta, a small Silicon Valley company that specialises in gesture-recognition technology. Canesta makes chips that, when coupled with a digital camera, give all manner of devices a sense of depth perception for the world around them, letting them “see” in three dimensions. The company holds 44 patents related to 3D sensing technology used in user interfaces, like Microsoft’s Kinect technology. Matt Rosoff at Business Insider guesses that Canesta approached Microsoft with a patent claim and, rather than litigating, Microsoft settled.
Internet Explorer Dips Under 60% Market Share For First Time (Ars Technica)
NetApplication’s browser market share numbers are in for the month of October. Microsoft’s IE sustained continued declines to 59%, a new low. The IE9 beta failed to capture the attention of the browsing public. Meanwhile Firefox slips a tad farther away from the 25% market share mark, while Chrome and Safari continue growth.
Microsoft Puts Silverlight On The Back Burner, Focuses On HTML5 (ZDNet)
Microsoft server president Bob Muglia confirmed a broader shift at the company away from Silverlight on the web and towards HTML5. Silverlight was now primarily the development platform for Windows Phone 7, but more cross-platform efforts would rely on the more universal standard. Muglia stressed that Silverlight would still run on Macs and (indirectly) Linux systems, but HTML5 was the only guarantee of support for the iPhone and Pad. Another blow to Adobe.
Microsoft Has About $20 Upside (MarketWatch)
Cody Willard at MarketWatch is predicting that shares of Microsoft will hit around $45 per share. His rationale?
- Yield is still paying as much as you get from the 10-year Treasury
- Huge stockpile of cash of about $40 billion
- Stock is cheap trading at less than 10x next year’s estimates
- Stock is even cheaper if you go ex-cash at around 8x next year’s estimates
- Xbox 360 Kinect system is going to be a huge hit for consumers
It’s not Apple, but at 8x earnings, you have to be long Microsoft. And the company will pay 3% annually to wait for Ballmer to get fired.
Daily Trader: Four ETFs To Play MSFT’s Net Income Jump (Minyanville)
Core products pushed Microsoft revenues and net income up in the third quarter, further extending the decent tech earnings season and giving further support to the Software HOLDERs ETF (SWH), the iShares Dow Jones US Technology (IYW), the Technology Select Sector SPDR (XLK) and the Vanguard Information Technology ETF (VGT).