MSFT Flat In Mixed Market Stocks are opening mixed after two economic reports suggested a sluggish recovery. The U.S. trade deficit narrowed in April and slightly more people applied for unemployment benefits last week. Shares of MSFT are flat versus a positive tech tape. Upcoming catalysts include entrance in the tablet market;
Windows Phone 7 / Mango 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 (retooling the
Bing /
Yahoo! partnership or just buying them outright); and continued evolution of
Kinect and the next generation
Xbox console. The stock currently trades at
8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.
Microsoft Should Buy Netflix For Their CEO Alone (Fortune) Microsoft has $50 billion in cash lying around. Meaning, the company could buy
Netflix and still have plenty enough left to buy
Nokia if it wanted. Buying Netflix and installing Hastings as co-CEO would position Microsoft to return to the center of the tech industry. Netflix could speed the Xbox' transition from a gaming console to a mainstream device connecting TVs to the Internet. And Hastings, who has a deep understanding about the opportunities and obstacles facing cloud-based content, could focus on pushing Microsoft into the future while Ballmer oversees the traditional PC-software businesses.
Read » Microsoft May Go The Tablet Route The Apple Way (DigiTimes) Microsoft may be tearing a page out of Apple's book. The company is reportedly in talks with manufacturers to launch a
Windows 8 tablet with its own branding, effectively creating an official Microsoft tablet in a move to challenge Apple's
iPad and the growing field of tablets using Google's
Android operating system. The company is possibly planning to rope in
Texas Instruments to supply the processor and some Taiwanese or Chinese OEM to build the rest of the hardware. Matt Rosoff at
Business Insider thinks
Microsoft making it's own tablets is a terrible idea on multiple levels.
Read » Microsoft Acquires ERM Vendor In Preparation For New Versions Of Office (ZDNet) Microsoft acquired enterprise risk management (ERM) software vendor Prodiance "to bring more compliance functionality within Microsoft Office." Microsoft is in the midst of launching Office 365 later this month and is developing Office 15, the version of Office expected to come to market by 2013. Deal terms were not disclosed, however it probably didn't put the slightest of dents in their cash balance.
Read » eMarketer Ups Online Advertising Estimates On Strong Display Search (eMarketer) eMarketer's new US online advertising estimates for 2011 predict 20% growth of the industry to $31.3 billion -- significantly higher than the previous forecast of 10.5% growth to $28.5 billion. The increase is largely fueled by higher-than-expected spending on display advertisements, which continue to grow at a faster pace than search. For the first time, display is within striking distance to search and will surpass search spending within the next five years. Good news on the display front for
Yahoo and
Bing, if they can find a way to fight off
Facebook.
Read » Daily Trader: Microsoft Too Cheap To Pass Up (Seeking Alpha) The stock price of Microsoft has slipped to $24 per share, once again bringing the shares well into value investor territory. How can a growing, highly profitable company with a near-monopolistic market position trade at a trailing FCF yield in the mid teens (~12%-15%)? A sum-of-the-parts valuation analysis suggests an intrinsic value range of $28-$42 per share. This range implies considerable upside from Microsoft’s recent stock price.
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