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MSFT Flat As Market Continues To Slide
European debt fears continue to rattle the markets today with shares of MSFT trading flat or slightly off. 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 8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.
Gartner Cuts PC Outlook For This Year And Next (Barron’s)
No surprise, the PC outlook is getting weaker by the day. Gartner cut its PC growth forecast for this year from 17.9% to 14.3%, or 352 million units citing growing interest in tablets. Gartner also cut its 2011 forecast from 18.1% to 15.9%, or 409 million units. After refraining from PC purchases because of tight budgets, consumers and businesses will slow their PC replacements as they “turn to other devices as their primary computer.” That can’t be good for Microsoft with a significant amount of Windows revenue (85%) coming from OEM deals. Business Insider’s Matt Rosoff seems to think Microsoft will be alright with the reluctant shift to the licensing model.
Microsoft Attempting To Get Into the TV Ring…Again (Reuters)
Microsoft is about to jump back into the TV game. Only this time, it may aim at cable, satellite and phone companies. The software powerhouse has held talks with TV networks to create a new subscription-based TV service on its Xbox gaming console that would rival efforts by Google, Apple and Netflix. The “virtual cable operator” service would charge a monthly fee for access through the Xbox to networks. Business Insider’s Matt Rosoff thinks Microsoft should have learned its lesson by now. It’s almost impossible for a technology company to change TV distribution in a meaningful way and make money. For now at least.
Android Outselling WP7 Fifteen To One (MobilePlease)
UK retailer MobilesPlease provided data that showed disappointing Windows Phone 7 sales. Just 3% of the company’s sales were of devices using Microsoft’s new mobile OS. The figure was enough that Android outsold WP7 by a ratio of 15:1 and even Symbian was outselling it by a factor of 3:1 with just one phone, the Nokia 8. Read more at Business Insider.
Microsoft Won’t Make Money On Phones But It Will On Patents Says Top Lawyer (All Things Digital)
Microsoft is still hoping that Windows Phone 7 proves to be a hit, although reports seem to indicate the contrary, but the company doesn’t see its success as the only way to make a profit from mobile phone technology. Microsoft top lawyer Brad Smith said that the company also sees a chance to make money from its vast pool of smartphone-related patents. He wouldn’t quantify the revenue opportunity, but conceded it doesn’t expect to be able to get as much per phone as it does when someone uses its software. Is he aware of the chaos in the phone patent arena at the moment which will undoubtedly spill over into tablets as well?
Microsoft Half Way To Its Kinect Target Of 5 Million Units Sold (Barron’s)
The holiday season’s been good for Microsoft so far. The company announced it had sold 2.5 million Kinect devices in just 25 days on the market, or an average of 100,000 per day. The company says it’s on target to meet its goal of 5 million by year’s end. Read more at Business Insider.
Majority Of Microsoft Investors Believe The Stock Is A Hold (The Street)
In a recent Street poll, approximately 27% of respondents said that lack of growth in Microsoft shares is the reason to sell the tech stock. Roughly 11% of poll respondents said that Ballmer’s first big sale of Microsoft stock since 2003 was a reason to ditch Microsoft shares while only 6% said that Gates’ annual selling was a major concern. In a bit of good news for the tech giant, approximately 45% of poll respondents said that they are sticking with Microsoft shares regardless of recent insider selling or lack of share value growth.
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