Is Microsoft The Ultimate Value Trap?
Amit Chokshi, CFA • 90 Comments
Amit Chokshi, CFA • 90 Comments
Is Microsoft The Ultimate Value Trap?
Amit Chokshi, CFA • 90 Comments
Amit Chokshi, CFA • 90 Comments
Thu, May 26, 1:18 PM
- Microsoft (MSFT -0.8%) and Facebook (FB +1.2%) are teaming up to lay a new subsea cable across the Atlantic to set a new standard for trans-Atlantic data transfers.
- The MAREA cable combines eight fiber pairs and an initial transfer capacity of 160 Tbps, and is designed to be openly interoperable with a variety of networking equipment. It will run 6,600 km and take a more southerly route than other systems, connecting Northern Virginia to Bilbao, Spain, and then to other network hubs in Europe, Africa, the Middle East and Asia.
- Building the cable begins in August, with completion expected October 2017.
- Telxius -- the infrastructure unit that subsea veteran Telefonica (TEF +1%) is considering giving an IPO this summer -- will manage the new system.
Wed, May 25, 2:10 PM
- Gaming site Kotaku reports Microsoft (MSFT +1.5%) plans to launch "a cheaper, smaller, Xbox One" this year, and will launch a more powerful model in 2017. The cheaper/smaller Xbox is expected to be shown off at the industry's E3 conference (runs from June 14-16).
- The 2017 console, codenamed Scorpio, will have a more powerful GPU, and be capable of handling 4K gaming and directly supporting Facebook's (NASDAQ:FB) Oculus Rift VR headset. Microsoft already has a partnership with Oculus through which streamed Xbox One games can be played on Rift headsets connected to Windows 10 PCs.
- Also reported: 1) Microsoft wants to further its efforts to converge Xbox and Windows, with future hit games released on both platforms. 2) Microsoft is moving towards an "incremental" upgrade model for consoles (much as it's doing for Windows), with frequent hardware upgrades replacing massive upgrades that arrive every several years.
- Sony has been widely reported to be prepping a revamped PlayStation 4 that supports 4K gaming and "enhanced" support for the company's PlayStation VR headset. Both the new console and the PlayStation VR are expected later this year.
- AMD (AMD +0.2%) supplies an APU (integrated CPU/GPU) for both the PS4 and Xbox One, and will presumably get an ASP boost from the sale of more powerful APUs for 4K-capable consoles.
- Update: Also of interest: The Verge reports Microsoft plans to unveil a "Chromecast-like" streaming stick for Xbox digital content at E3. The device will work with Xbox One controllers.
Wed, May 25, 6:26 AM
- Struggling to restart its mobile strategy after multiple misfires, Microsoft (NASDAQ:MSFT) has announced a further step in dismantling the mobile-phone operations it acquired from Nokia.
- The software giant will lay off 1,850 workers, taking an impairment and restructuring charge of approximately $950M in the current quarter.
- Last summer, Microsoft wrote down $7.6B related to its mobile-phone business and fired 7,800 workers in those operations.
Mon, May 23, 7:56 PM
- Fresh off earnings that showcased the strength of its mobile games lineup, China's NetEase (NASDAQ:NTES) unveiled a substantial development slate of 41 games at its second annual "Game Enthusiasts' Day" in Guangzhou.
- Those include new entries in its flagship mobile franchise -- Fantasy Westward Journey: Warriors, and Westward Journey: Rage. It's also stretching legacy PC-game successes into the mobile word, including MMORPG Tianxia III, fighting game Datang and MMO game Demon Seals.
- Meanwhile, the company's also coming off a weekend deal with Microsoft (NASDAQ:MSFT) to bring addictive sandbox success Minecraft to China, after a usual lengthy struggle with trade regulations. It announced a five-year exclusive deal with Microsoft and Mojang to license mobile and PC editions of the game to an affiliate in mainland China, including a version tailored for the Chinese market.
- Now read China's Woes Create Opportunities For New NetEase Investors »
Thu, May 19, 5:39 AM
- Snow White has landed in the 21st century... Microsoft (NASDAQ:MSFT) has unveiled a Magic Mirror - a so-called smart mirror that can recognize and greet users, and display the weather, time and other information.
- The device was showcased at InnovFest Unbound 2016, a digital technology conference in Singapore, and contains a hidden facial-recognition camera that can detect eight human emotions.
- Features such as news and Facebook/Twitter feeds are expected to be added soon.
Wed, May 18, 9:27 AM
- Microsoft (NASDAQ:MSFT) is bailing out on Nokia's feature phone business, selling its assets there to FIH Mobile (a unit of Foxconn (OTC:FXCOF)) and HMD Global for just $350M.
- FIH Mobile takes over Microsoft Mobile Vietnam in the deal, and that unit's 4,500 employees will join FIH Mobile or HMD Global or transfer.
- All feature phone assets are transferring, but Microsoft will continue work on Windows 10 Mobile and supporting Lumia phones from OEM partners.
- Microsoft had a feature phone brand license until 2024 but is electing to get out of the business now. Speculation points to the prospect of a Surface Phone launch in the coming year.
- MSFT is -0.5% premarket.
- Now read Microsoft Should Say Goodbye To Lumia, Let Another Firm Carry That Brand »
Tue, May 17, 1:19 PM
- As part of its latest move to make nice with a rival, Microsoft (MSFT -2.1%) is partnering with enterprise software giant SAP (SAP -0.8%) to support the use of SAP's popular Hana in-memory database - it's often used for performance-intensive analytics and transaction-processing work, and competes with the in-memory features of Microsoft's SQL Server database - on Azure's cloud infrastructure.
- A single Hana instance on Azure will support up to 3TB of RAM, with 32TB supported over 16 instances. SAP already supports Hana on Amazon Web Services, as well as through its own cloud platform.
- Also: The companies have partnered to integrate several SAP product lines - its Ariba procurement/B2B software, Concur travel/expense management software, SuccessFactors HR software, and Fieldglass labor-management software - with Office 365. And Microsoft's Intune mobile device management (MDM) software will be able to manage apps from third-party developers that rely on SAP's Hana Cloud Platform (lets developers build cloud apps running on top of Hana).
- Separately, SAP has updated Hana to include graph data processing and capture & replay support. The former helps companies better understand and visualize patterns involving people, places, and things, and the latter helps IT workers evaluate and assess the impact of changes made to Hana workloads.
- The Microsoft alliance follows a partnership with Apple through which SAP will (among other things) help enable third-party iOS apps that can leverage the Hana Cloud Platform. SAP is hosting its annual Sapphire Now conference this week.
- Now read Microsoft Should Say Goodbye To Lumia, Let Another Firm Carry That Brand
Mon, May 16, 6:31 PM
- Jon Jacobson's Highfields Capital Management got out of Yahoo (YHOO +2.7%) and Microsoft (MSFT +1.5%) in Q1, and trimmed most of its stake in McDonald's (MCD +0.6%) while adding other consumer names, according to its 13F filing.
- The firm sold 12.79M shares of Microsoft (valued at $709.7M) and 7.14M shares of McDonald's ($808M), along with selling 7.2M shares of Yahoo (about $239.5M worth).
- It retains a stake of 4.76M shares of McDonald's. Meanwhile, it took a new position in Marriott (MAR +1.2%) -- 6.86M shares valued at $488.3M -- and bought 2.79M shares in Walgreens Boots Alliance (WBA +0.8%).
- Now read Microsoft - When Do Investors Get To See The Beef? »
Tue, May 10, 4:12 PM
- Reacting to news of a possible sale of Marketo (NASDAQ:MKTO) -- which just closed up 24.7% after spiking 15% on earlier chatter -- Credit Suisse believes SAP is the most likely acquirer.
- Several vendors are still missing critical CRM components, the firm says, and Microsoft (NASDAQ:MSFT) is a potential bidder as well.
- Acquisitions in the cloud sector have tended to focus on the multiples of enterprise value to the last-12-months subscription revenues, it says.
- Modeling several acquisitions over the past year and applying that multiple to Marketo ($198.9M in last-12-months sub revenue, and revenue growth of 38.1%) brings a share price of $44.35 -- 65.7% upside from the just-inflated closing price. Applying a standard error to the multiple brings a warranted price range of $37.03-$51.67 (38% to 93% upside).
- Now read Competition The Issue As Marketo Pivots To Enterprise »
Tue, May 10, 2:48 PM
- Marketo (NASDAQ:MKTO) has resumed trading after a volatility halt, spiking up 15.5% on reports that it's considering strategic options, including a possible sale of the company.
- Shares had moved in early April on similar talk, possibly with acquisition interest from Microsoft or SAP.
- Later last month, Bernstein speculated that most likely acquirers were SAP, Adobe (NASDAQ:ADBE) and Microsoft (NASDAQ:MSFT).
- Now read Competition The Issue As Marketo Pivots To Enterprise » »
Tue, May 10, 5:03 AM
- Microsoft (NASDAQ:MSFT) is shutting down its Chinese Web portal next month as the company shifts its focus from providing online content to offering software and services for Windows 10 devices.
- The software giant, which is under investigation by Chinese antitrust authorities, said it plans to continue to invest in other business in the country as well as maintaining its research and development operations there.
Thu, May 5, 10:50 AM
- Windows 10 now runs on 300M active devices, Microsoft (MSFT +0.4%) discloses. That's up from 270M in late March, and 200M in early January.
- Windows 10's availability as a free upgrade to Windows 7/8 users has helped adoption rates easily surpass those for the oft-criticized Windows 8, in spite of weak PC sales. NetMarketShare estimates 15.3% of the global PC installed base is on Windows 10, compared with 9.9% on Windows 8.1, 3.2% on Windows 8, and 10.6% on Windows XP. 47.8% of the base is still believed to be on Windows 7. Free upgrades will disappear on July 29, the one-year anniversary of Windows 10's launch.
- Also disclosed by Microsoft: Over 63B minutes were spent using the Edge browser (shipped with Windows 10), and the Cortana assistant (built into Windows 10) has answered over 6B questions. Over 9B hours of gameplay have been seen on Windows 10, which supports Xbox One game streaming.
Tue, May 3, 2:09 PM
- Acquisition-happy Microsoft's (MSFT -1.3%) latest buyout target is Solair, an Italian provider of software/services used to deploy, monitor, and collect data from IoT devices. Terms are undisclosed; offshore cash was presumably used.
- Microsoft: "Solair shares our ambition for helping customers harness their untapped data and create new intelligence with IoT, and this acquisition supports our strategy to deliver the most complete IoT offering for enterprises." The company adds Solair's services are built on Azure, and will be integrated with Microsoft's Azure IoT Suite (launched last year).
- Existing Solair clients include espresso machine maker Rancilio Group and power supply system maker AEG Power. In addition to Microsoft, Amazon, IBM, and Cisco have been making big investments in cloud-based IoT services. In February, Cisco announced a $1.4B+ deal to buy IoT service provider Jasper Technologies.
- Recent Microsoft acquisitions
Mon, May 2, 7:56 AM
- April monthly performance was: -0.42%
- $0.06 in dividends were paid in April
- Top 10 Holdings as of 3/31/2016: Coca-Cola Co (KO): 4.27%, Microsoft Corp (MSFT): 3.51%, Altria Group Inc (MO): 3.33%, Apple Inc (AAPL): 3.31%, AbbVie Inc (ABBV): 2.67%, International Business Machines Corp (IBM): 2.38%, McDonald's Corp (MCD): 2.09%, Cisco Systems Inc (CSCO): 1.95%, 3M Co (MMM): 1.84%, Home Depot Inc (HD): 1.81%
Mon, May 2, 7:55 AM
- April monthly performance was: +0.42%
- $0.19 in dividends were paid in April
- Top 10 Holdings as of 3/31/2016: Exxon Mobil Corporation (XOM): 3.51%, AT&T Inc (T): 3.5%, Microsoft Corp (MSFT): 3.01%, Apple Inc (AAPL): 2.86%, Verizon Communications Inc (VZ): 2.85%, General Electric Co (GE): 2.34%, Chevron Corp (CVX): 2.27%, Johnson & Johnson (JNJ): 2.27%, Procter & Gamble Co (PG): 1.95%, Wal-Mart Stores Inc (WMT): 1.85%
Sun, Apr. 24, 6:27 PM
- via Credit Suisse, the 15 hottest large cap "rising stars," followed by the number of large cap funds that own them, and the change vs. prior quarter.
- SYF - Synchrony Financial, 74 | 47
- MSFT - Microsoft, 350 | 36
- GOOGL - Alphabet 324 | 39
- MCD - McDonald's, 104 | 24
- DAL - Delta Air Lines, 114 | 19
- GPN - Global Payments, 34 | 19
- TSN - Tyson Foods, 61 | 18
- CVX - Chrvron, 180 | 17
- DFS - Discover, 90 | 16
- RTN - Raytheon, 85 | 16
- WFC - Wells Fargo, 250 | 16
- GIS - General Mills, 63 | 15
- JPM - JPMorgan Chase, 276 | 15
- URI - United Rentals, 36 | 15
- CBS - CBS Corp., 65 | 14
- CMCSA - Comcast, 223 | 14
- "We are wary of owning too many Rising Stars, as the potential for differentiation has diminished,"
Microsoft Corp. develops and markets software, services and hardware that deliver new opportunities, greater convenience and enhanced value to people's lives. The company's products include operating systems for computing devices, servers, phones, and other intelligent devices; server... More
Industry: Application Software
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