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MSFT Fighting Back
Markets are off today as the financial sector indicates troubles ahead. J.P. Morgan beat lowered expectations after weakness in the investment banking division. Shares of MSFT are regaining ground from this morning’s sell-off. Upcoming catalysts include first fiscal quarter earnings announcement on Thursday, October 20 at 5:30pm ET; Windows 8 and entrance into the tablet market; Windows Phone 7 / Mango rollout (see below) and 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 / display business; and continued evolution of Kinect and next generation Xbox console (see below). The stock currently trades at 7.7x Enterprise Value / TTM Free Cash Flow.
Goldman Sachs Cuts Online Ad Spending Forecasts (Associated Press via Forbes)
The U.S. online advertising market is heading for a slowdown as a struggling economy crimps marketing budgets, according to a Goldman Sachs. Under its revised forecast, the U.S. online advertising to climb 10% next year instead of its previous projection calling for a 13% increase. For the current year, Goldman Sachs foresees a 14 per cent gain in online advertising. Not good for Bing (and Yahoo) as advertisers decrease spending.
Is Skype Integration Going To Be Everywhere? (Ars Technica)
Microsoft has big plans for Skype. But no one knows exactly what they are. Microsoft gaining regulatory approval, the merger is likely to be completed in the near future. The most obvious places for integration are Lync, Microsoft’s unified communications platform, and Windows Phone. But over time, Skype could be baked into more products like Outlook, Windows Live Essentials, and Xbox Live, or even become a pre-installed component of Windows on the desktop.
Microsoft Turns To Facebook For Researching Opportunities (Forbes)
A $240 million investment well worth it. For the last couple of weeks, researchers at Microsoft have been studying the way hundreds of people play strategic games, using Facebook as a kind of giant, global laboratory. Results will give them new insights into game theory, that little corner of mathematics where games and economics collide. It’s unclear how the company might benefit from the research. It might be too abstract for Xbox Kinect but one potential avenue would be to provide behavioural insights that are useful for Microsoft’s marketing (Bing) ultimately feeding into the bigger game of making money.
Microsoft Buys Independent Game Developer (Joystiq)
After developing games exclusively for Xbox 360 and PC, it’s fair to say that indie developer Twisted Pixel has been going steady with Microsoft. The two have finally tied the knot. Should gamers be worried that games like Splosion Man and The Gunstringer are in danger? Phil Spencer, Microsoft Studios’ corporate vice president, admits there have been some rocky acquisitions in the past for the company’s game publishing arm. It’s time for a more hands-off approach. No financials were disclosed.