THE MICROSOFT INVESTOR: Microsoft Still Struggling In Search, Mobile And Otherwise

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Photo: Associated Press

MSFT Flat As Market Wavers
Shares of MSFT are relatively flat in early trading as the market tries to process foreclosure rates and FedEx’s earnings news. Upcoming catalysts include upgrade cycles of Office 2010 and Windows 7; any entrance into the tablet market; the launch of Windows 7 mobile; any adoption of Azure (cloud computing); and gamer reaction to Kinect. The stock currently trades at 8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.Microsoft Continues To Struggle To Gain Mobile Search (The Wall Street Journal)
Microsoft is still struggling to make headway in a market that continues to be dominated by Google (on multiple fronts, but let’s stick to mobile). In July, only 1.7% of U.S. mobile phone customers surveyed by comScore had used Microsoft’s search technology compared to 14.4% had used Google. In efforts to increase demand, seven new Android phones scheduled to come out on Verizon this fall will feature its search engine, Bing. Microsoft’s weakness in mobile can be attributed to the fact that it has yet to produce an operating system that proves a hit with smartphone consumers.

Search Results Are Mixed: Is Bing Number Two Or Flat? (Various)
Depends on classification (weeding out gimmicks), so I might be inclined to side with comScore on this one:

  • August comScore search data is out showing Bing’s search share increased ever-so slightly from 11.1.% (up from 11% in July). Google’s share dropped (again) to 65.4% (from 65.8%) while Yahoo has finally stabilised at 17.4% (up from 17.1%). The key take away from Dan Frommer at Business Insider: Google, while not shrinking much, is not gaining. It certainly doesn’t look like it’s going to get to 80%+ share any time soon. Though perhaps the new “Google Instant” search will help gain share.
  • According to a report released by Nielsen Company, Bing overtook Yahoo! search in the U.S. as the number 2 search engine during the month of August. Bing search share came in at 13.9% compared with Yahoo! at 13.1%. Google remained stable at 65% share.

The New Internet Explorer Takes On Chrome (Bloomberg)
Microsoft released a new version of its Internet Explorer (IE) Web browser, aiming to stem market share losses to Firefox, Chrome and Safari. Its share of the browser market has fallen to 60% from 74% about two years earlier. Early developer buzz for the product is positive with chatter that IE might regain some ground lost to Firefox. Mr. Softie even got a nod from Google. That said, the biggest threat going forward is Chrome which is thought to be cutting edge. Market share of Google’s browser jumped from 7.5% from 1.1%.

Halo: Reach Murdering Sales Figures (TechFlash)
In a 24 hour period, Microsoft rang up $200 million in sales from the new release of Xbox game, Halo: Reach. This is the biggest release ever for a Microsoft game, and it’s one of the biggest openings for anything of this kind this year. This is good news for the software giant. Microsoft’s gaming division is one of the biggest drivers of the company’s top line in the last 10 years.

Buying Microsoft: Is It The Right Move? (BloggingStocks)
Steve Mallas is underwater on his Microsoft position. So what is he doing? He keeps buying more and will most likely hold on and continue to dollar-cost-average the position. If management does come through with a higher dividend and a share repurchase program, he’s praying the shares will attract more interest from Wall Street. Microsoft is a cheap blue-chip stock. If you believe the longer-term story, hanging on is probably the way to go.

Daily Trader: Bullish Sentiment Building In MSFT (Learning Markets)
There is some bullish pressure building up in the background of MSFT. Based on recent flows, MSFT has an up / down ratio of 1.24. The stock has gained more than 3% during the past month and is currently trading above its 20-day and 50-day moving averages but below its 200-day moving average.

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