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MSFT Down As Market Slides
As European bank worries flare up again, shares of MSFT are down with the broader markets. 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.Fund Managers Line Up To Take Advantage Of rumoured Dividend Hike (Gulf News)
Microsoft is trading around 10x expected earnings for the next 12 months, close to its lowest multiple on record and a 70% discount to peers. That’s attracting a lot of big name fund managers including: Singh’s TPG Axon, Einhorn’s Greenlight Capital, Griffin’s Blue Ridge and Claugus’s GMT Capital. Consensus is that Microsoft is now more of a value investment than a growth opportunity, and it is expected to increase its quarterly dividend next month. While the company continues to dominate the enterprise, its mobile presence is still in doubt.
Microsoft Could Triple Its Dividend Without Batting An Eye (Morningstar)
Morningstar’s Josh Peters takes a look at some dividend ideas in the market. The tech sector historically tends to shy away from dividend distribution. Those that pay out do so at 2-3% yield, small relative to market cap. And it’s not because it can’t pay more. Microsoft could double or triple its dividend overnight without having to pass on internal growth. But there is a stigma associated with dividends, and tech can’t just grow up and issue money back to the investor. Josh says we’ll have to wait and see if taxation on dividends go up and how certain companies react.
Microsoft Is At Historically Cheap Levels And A Discount To Peers (The Motley Fool)
Microsoft is cheap right now no matter how you slice the numbers; forward, trailing, you name it. And it’s cheap relative to its peers. The more consistent a company’s performance has been, the more growth one can expect and the more investors should be willing to pay. That’s great in theory, but in the case of Microsoft, that’s not happening in practice. At least, not yet.
Google Retains AOL Search Business, Microsoft Doesn’t Even Try (paidContent)
Microsoft has said that it was willing to invest 5-10% of its operating income on its search business. However, Mr. Softie wasn’t willing to spend enough to become AOL’s new search partner. In fact, the bid wasn’t even competitive enough to bring negotiations down to the wire. This might be the start of Microsoft showing investors it actually wants to dial down its online spending (which has been a money pit for the company). Either that or it may simply be AOL specific; namely its bleak search prospect.
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