Seeking Alpha

Sherlund hikes Microsoft PT, considers it "likely" Mulally will be named CEO

  • Nomura's Rick Sherlund, a staunch Microsoft (MSFT) bull, has raised his PT to $45 (a Street high) from $40, and thinks the company could produce FY15 (ends June '15) EPS of $3.80 (far above a $2.92 consensus) thanks to new management, cost cuts, the shedding of the Xbox and Bing units, and changes to Microsoft's capital structure.
  • Sherlund also deems it "likely" Alan Mulally, just reported to be on Microsoft's CEO shortlist, will be named Steve Ballmer's replacement by December, and thinks the software giant might decide to repurchase Ballmer's $12B stake.
  • Shares +1.5% premarket to new multi-year highs.
  • Previous: Sherlund sees Nokia unit diluting Microsoft's EPS into FY15
From other sites
Comments (20)
  • wigit5
    , contributor
    Comments (4248) | Send Message
     
    Sounds good to me.
    6 Nov 2013, 09:34 AM Reply Like
  • JoseV
    , contributor
    Comments (408) | Send Message
     
    Dont quite believe Mulally will leave Ford before end 2014 but stranger things hav happened
    6 Nov 2013, 09:38 AM Reply Like
  • djblackprince
    , contributor
    Comments (33) | Send Message
     
    Shedding Xbox and Bing seems terribly short-sighted.
    6 Nov 2013, 10:21 AM Reply Like
  • wigit5
    , contributor
    Comments (4248) | Send Message
     
    djblackprince;
    It may seem that way but what you have with MSFT right now is a huge company covering several different product lines and none getting the attention it deserves. Its to big to manage and too diverse...

     

    I think creating a company around Xbox in particular is a great idea whether they spin it off completely or just maintain majority control via shares.
    6 Nov 2013, 10:27 AM Reply Like
  • Ruffdog
    , contributor
    Comments (2251) | Send Message
     
    I agree, but the sale of Xbox would generate a lot of cash for a part of the business that generates a relatively small amount of cash.
    6 Nov 2013, 01:14 PM Reply Like
  • Transcripts&10-K's
    , contributor
    Comments (1097) | Send Message
     
    "It may seem that way but what you have with MSFT right now is a huge company covering several different product lines and none getting the attention it deserves."

     

    I was under the impression - from things like market share, etc - that Xbox and Bing are both either (A) already quite dominant, as is the case with Xbox, or (B) gaining significant market share, as Bing has done in the United States for the past three years - with search advertising up nearly 50% in the most recent quarter.

     

    Microsoft continues to further integrate Bing into their current product offerings, and only started getting serious about the venture 3-4 years ago; the chances this division will be sold are slim / none in my opinion...
    6 Nov 2013, 03:47 PM Reply Like
  • wigit5
    , contributor
    Comments (4248) | Send Message
     
    Bing is gaining market share that's true but its still losing the company money, and it isn't anywhere close to competing with Googles market share numbers (if I recall correctly anyways). I think this probably would be hard to spin off given how integrated it is now with windows but who knows.

     

    Xbox I think would benefit the most from a spin off though simply because it has nothing to do with MSFT's core, the variable though is they are trying to now sell it as a full home entertainment system instead of just a gaming console so maybe that'll work and it'll make more sense as homes become more computerized.
    6 Nov 2013, 04:02 PM Reply Like
  • Transcripts&10-K's
    , contributor
    Comments (1097) | Send Message
     
    "Bing is gaining market share that's true but its still losing the company money, and it isn't anywhere close to competing with Googles market share numbers (if I recall correctly anyways)."

     

    You are 100% correct on that - of course, by that logic, should Yahoo get out of the search game? How about AOL, etc?

     

    Also, Google is (likely, we have no way of knowing because of no real disclosures) losing money on Chromebooks, Google Docs, etc - if currently losing money is the criteria for investment, should these be shuttered as well?

     

    My personal opinion is that MSFT realizes that machine learning will be critical to their future success, and wants to weave Bing across multiple product lines; you have recently seen it with Smart Search in Windows, and I think Office is right around the corner.

     

    On Xbox - I agree with you :)
    6 Nov 2013, 04:22 PM Reply Like
  • wigit5
    , contributor
    Comments (4248) | Send Message
     
    Good points... lots to think on, losing money doesn't necessarily mean shut it down to me if there is future prospects of making money or integrating it to boost other products appeal (googledocs like stuff). But if there is no hope of it ever making money or doing that then yes I think shutting down is appropriate.

     

    I'm not advocating Bing or Xbox be shut down, I just think/feel they could be better handled if they weren't lumped in with all the other things MSFT is doing....

     

    I like the smart search in Windows by the by I still dont understand why people don't like windows 8... booting up and just typing in what I want and getting it is wonderful...
    6 Nov 2013, 04:28 PM Reply Like
  • toraji
    , contributor
    Comments (818) | Send Message
     
    Wigit,

     

    I am actually disappointed by your comments here. I always had the feeling you were MS all the way.

     

    Now they finally have the possibility to reap their seedlings I want them to PUSH harder and further so they can follow up on their efforts made in the market (bing, Xbox, Nokia etc). I don't want them to die on the door step.

     

    They always have been big and did pretty good..... THIS is the time to actually proof to the world who they are right?

     

    Regards
    t
    6 Nov 2013, 09:46 PM Reply Like
  • wigit5
    , contributor
    Comments (4248) | Send Message
     
    I am MS all the way in just about everyway... I have a PC (built myself) bought my first copy of windows back in the late 90s. Have owned dozens of PCs, Lumia 920, have owned all the xbox's and will get Xbox One when I am able too...

     

    And it was the 3rd stock I bought when I started thinking for myself (ditched the financial manager).

     

    My feeling is sometimes you have to let your children go so they can grow... I could be wrong I don't have huge convictions on the matter... I just feel they could do even better if separated meaningfully from the normal structures.
    7 Nov 2013, 08:43 AM Reply Like
  • toraji
    , contributor
    Comments (818) | Send Message
     
    I think the kids (surface and wp8) are just to small to swim in that big pool of droids and Apple's for now ;-)

     

    Regards
    t
    7 Nov 2013, 10:03 AM Reply Like
  • wigit5
    , contributor
    Comments (4248) | Send Message
     
    I agree WP8 and the tablets should be left alone for now they still require a lot of money and investment...
    7 Nov 2013, 10:10 AM Reply Like
  • toraji
    , contributor
    Comments (818) | Send Message
     
    I am happy we agree on that one :-) because I think both of them will be really big BOYS that will carry a lot of weight from their parents when they get older ;-)
    7 Nov 2013, 08:19 PM Reply Like
  • reader
    , contributor
    Comments (327) | Send Message
     
    Maybe my holding MSFT for all this time will finally pay off.
    6 Nov 2013, 10:50 AM Reply Like
  • Ruffdog
    , contributor
    Comments (2251) | Send Message
     
    It is especially if you are like me and reinvesting the dividends all these years.
    6 Nov 2013, 01:17 PM Reply Like
  • wil3714
    , contributor
    Comments (2135) | Send Message
     
    MS on its way to $40
    6 Nov 2013, 11:18 AM Reply Like
  • smart_investoor
    , contributor
    Comments (247) | Send Message
     
    eps of 3.80 is a bit high but might be achievable
    6 Nov 2013, 11:48 AM Reply Like
  • Ruffdog
    , contributor
    Comments (2251) | Send Message
     
    Not high, especially with the Lumina.
    6 Nov 2013, 01:18 PM Reply Like
  • toddjeremycohn
    , contributor
    Comments (18) | Send Message
     
    Oh silly Nomura, can you say Surface 360?
    6 Nov 2013, 01:31 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs