Dec. 16, 2014, 8:38 AM
- Microsoft's (NASDAQ:MSFT) outperformance of late is concerning, says analyst Kash Rangan downgrading to Underperform with $47 price target; especially in an environment of a slowing Win Pro cycle, an "elongated" Consumer Office 365 transition, the challenge of margin leverage, and sell-side exuberance over one-time financial moves.
- Under a "best case" scenario of a $30B buyback and $4B in operating expense cuts, Microsoft could run out of room for earnings growth, leading to a re-rating of the P/E ratio.
- Shares -1.3% premarket
Dec. 13, 2014, 4:10 PM
- Facebook (NASDAQ:FB) is no longer including Bing (NASDAQ:MSFT) results within Facebook Search. The social networking giant says it made the move because it's "focused on helping people find what’s been shared with them on Facebook," and insists it continues to "have a great partnership with Microsoft in lots of different areas."
- It was less than a week ago that Facebook expanded the scope of its internal search platform, adding the ability to search within posts that have appeared within a user's news feed. Moreover, in a move that could make Facebook a bigger indirect rival to traditional search engines, the company plans to eventually extend keyword search to all publicly-shared content.
- As it is, Facebook didn't offer the most direct approach to accessing Bing results - users typically had to click/tap on a "See more results" option, then choose from a list of suggested queries in a right-hand column box. "We don't think a lot of people will come to Facebook to do web searches," Mark Zuckerberg once admitted. However, with Facebook handling over 1B queries of all kinds each day, it still acted as a valuable traffic source.
- Meanwhile, Microsoft has rolled out a slew of new Azure cloud infrastructure and app platform services for the second time this fall (previous). Among the new offerings: 1) A high-performance (SSD-based) storage option for Azure virtual machines. 2) Performance and management improvements for the Azure SQL Database service. 3) An improved search service for 3rd-party apps.
- In addition, previously-announced services such as RemoteApp (cloud Windows app hosting) and Azure Active Directory (cloud identity/access management) are now generally available.
Dec. 11, 2014, 6:24 PM
- Microsoft (NASDAQ:MSFT) has bought HockeyApp, a provider of services that analyze crash data and distribute beta releases of apps for iOS and Android developers. Terms are undisclosed.
- Microsoft, hungry to win over mobile and Web/cloud developers who haven't historically embraced its products, plans to include HockeyApp's features in a new version of it Application Insights analytics service, which integrates with the company's mainstay Visual Studio app development suite.
- Last month, Microsoft announced it would make Visual Studio free for non-enterprise users, and promised Visual Studio 2015 would be "built from the ground up with support for iOS, Android and Windows." Facebook, Twitter, and Google have also released a bevy of tools for mobile developers.
- Separately, Microsoft has made its MSN consumer apps (formerly known as Bing apps) available on the iOS App Store, Google Play, and Amazon's Appstore for Android. News, sports, weather, finance, and health/fitness apps are among the released products; they were already available on Windows (through the Metro UI) and Windows Phone.
Dec. 11, 2014, 6:20 AM
- Microsoft (NASDAQ:MSFT) expects to release Windows 10 "early next fall," says Chief Operating Officer Kevin Turner, outlining a slightly later release than previous comments had suggested.
- An autumn release would put Windows 10 on track to launch three years after Windows 8, which received mixed reviews due to its tablet and touchscreen-oriented design.
Dec. 4, 2014, 1:51 PM
- Whereas Steve Ballmer and Bill Gates preferred to "retain cash for a rainy day," Satya Nadella may be open to bigger capital returns, thinks Nomura's Rick Sherlund, hiking his Microsoft (MSFT +1.9%) target by $6 to $56 and reiterating a Buy.
- Sherlund, who also notes activist ValueAct Capital's presence on the board, sees Microsoft launching "a more moderate, but still shareholder value enhancing, 5%-10% share repurchase" on to top of existing efforts to buy back ~$8B/year worth of shares. He adds Microsoft could lower its share count by 8% if it raised $32B in debt for buybacks.
- Microsoft's balance sheet would made larger buybacks easy to finance: The company had $89.2B in cash and short-term investments at the end of September, and $23.7B in debt. FY14 (ended June '14) free cash flow was $27.7B.
- Aside from capital returns, Sherlund is bullish about Microsoft's ability to cut Xbox and Bing costs, and to keep rapidly growing Office 365 and Azure revenue. His target was only at $40 14 months ago.
- Shares are rallying on a day the Nasdaq is up 0.1%. The 52-week high is $50.04.
- Earlier: Microsoft selling Nook stake to B&N
Dec. 4, 2014, 9:49 AM
- Along with its FQ2 results, Barnes & Noble (BKS -11.4%) has announced it's buying Microsoft's (MSFT +1.6%) stake in Nook Media for $62.4M in cash and 2.7M shares (current value of $52.8M). The companies have also "agreed to terminate their commercial agreement." (8-K)
- With Microsoft having invested $300M in Nook Media (contains B&N's Nook hardware, online bookstore, e-book, and college bookstore ops) in 2012 for a 17.6% stake, the software giant is taking a ~$185M loss on its investment.
- B&N's Nook segment revenue (covers hardware, digital content, and accessories) fell 41.3% Y/Y in FQ2 to just $62M, thanks to tough competition from Amazon and ongoing tablet cannibalization of e-readers. B&N's college segment saw revenue rise 1.9% to $751M.
- The sale follows Microsoft's July decision to lay off roughly half the workers in its Nokia phone unit, as part of a broader restructuring.
Dec. 4, 2014, 12:11 AM
Dec. 3, 2014, 6:45 PM
- The WSJ reports Google (NASDAQ:GOOG) plans to offer higher commissions to top-performing Google Apps resellers, hoping to put a larger dent into Microsoft's (NASDAQ:MSFT) productivity software dominance. Right now, Google has only 10K+ Apps reseller partners; Microsoft has 400K+ for Office.
- Gartner estimates Google accounted for less than 1% of the productivity market's revenue in 2013, compared with Microsoft's 90%+. Corporate familiarity/comfort with Office, together with strong uptake for Office 365 (features both cloud and local apps, unlike Google Apps), have stood in Google's way.
- Google has run about 6,000 studies for ad clients in recent months to see if brand ads leave their intended impression on viewers, says display/video ad VP Neil Mohan. The studies are part of an aggressive push by Google to compel marketers to move more of their brand ad spend online.
- Related efforts include working with Nielsen and comScore to get a better read on who's seeing a particular ad, and ensuring ad impressions are actually viewed by a person (still a challenge). YouTube is set to be a major beneficiary of the shift in brand ad spend towards digital channels.
- The U.K. plans to impose a 25% tax on profits locals produced by multinationals that are shifted to tax shelters. The press is already calling the levy a "Google tax" - it comes amid broader EU scrutiny of the use of tax shelters by multinationals.
- Google has confirmed it's launching versions of popular products, including search, YouTube, and Chrome, meant specifically for kids 12 and younger (previous). Though parental controls will be included, concerns about running afoul of FTC privacy and children's advertising rules exist. "We expect this to be controversial, but the simple truth is kids already have the technology in schools and at home," says Google exec Pavni Diwanji.
Dec. 1, 2014, 11:18 AM
- Acompli provides popular Android/iOS e-mail apps that support a variety of e-mail (Microsoft Exchange, Gmail, Outlook.com) and cloud productivity (Office 365, iCloud, Google Apps) platforms. Re/code reports hearing Microsoft (MSFT +1.1%) is paying $200M+ to buy the startup.
- "Acompli is the powerhouse email app for iPhone that Outlook users have been waiting for," The Verge declared in an April review. The app's integrated calendar and ability to provide quick access to recently-viewed files/attachments and important contacts received high marks. "Taken together, Acompli’s design encourages you to start thinking of your iPhone as a workstation in its own right."
- Microsoft: "In a world where more than half of email messages are first read on a mobile device, it’s essential to give people fantastic email experiences wherever they go ... We’re excited about what’s possible as we build on [Acompli's] success and bring it together with work currently in progress by the Outlook team."
- A recent unfinished blog post from a Microsoft VP suggested a deal would soon be announced. The purchase adds to a multi-platform push that has seen the release of free iPad Office apps and an Office/Dropbox integration deal.
Nov. 25, 2014, 6:32 PM
- State-owned Xinhua reports Microsoft's (NASDAQ:MSFT) Chinese subsidiary has agreed to pay RMB840M ($137M) in back taxes and interest, as well as over RMB100M/year in taxes going forward.
- Though Xinhua doesn't specifically name Microsoft, the software giant is the only company fitting the paper's description - a U.S. multinational whose name starts with "M," is one of the world's 500 biggest companies, and which established a Beijing subsidiary in 1995.
- Microsoft is still dealing with a Chinese antitrust probe amid intense post-NSA scrutiny of U.S. tech giants in general. The company has long complained about the huge impact of piracy on its Chinese sales.
Nov. 25, 2014, 2:46 PM
- "Not surprisingly, billionaires reduced their energy allocations (NYSEARCA:XLE) during Q3," says Direxion, unveiling the quarterly rebalance for the iBillionaire Index (which serves as the benchmark for the IBLN ETF). Attention was instead shifted to healthcare (NYSEARCA:XLV) and materials (NYSEARCA:XLB), with companies like Humana (NYSE:HUM) and Monsanto (NYSE:MON).
- Also added to the index: TMO, GM, FB, CBS, GOOG, MAS, APD, DAL, NOV, WHR, THC, ABBV.
- Dropped from the index: AIG, MCK, CTSH, MSI, RIG, CI, APC, GPS, MSFT, CMCSA, NFLX, MHFI, WMB, ICE.
- Outlying sectors: Consumer Discretionary (NYSEARCA:XLY) makes up 23.33% of the iBillionaire Index vs. 11.68% for the S&P 500, and Industrials (NYSEARCA:XLI) and financials (NYSEARCA:XLF) make up just 6.67% each of the index vs. 10.44 and 16.30 of the S&P 500, respectively. Consumer Staples (NYSEARCA:XLP) have zero representation in the index vs. 9.7% in the S&P 500.
- Previously: Direxion launched an ETF with iBillionaire today
Nov. 25, 2014, 1:13 PM
- The Information reports Yahoo (YHOO - unchanged) and search partner Microsoft (MSFT +0.5%) are aggressively trying to sell Apple on replacing Google (GOOG +0.6%) as the default search engine for the Safari browser (pre-installed on all iOS/Mac OS hardware) when its Google deal expires in 2015.
- Apple, which naturally views Google as a major rival, already dropped Google as iOS and Mac OS' Spotlight search provider this year in favor of Bing. Yahoo, meanwhile, is less than a week removed from announcing it has displaced Google as Firefox's default U.S. search provider; Google is still the default provider in Europe.
- The Firefox deal suggests Google is willing to walk away from default search agreements if Yahoo/Microsoft (hungry to grow their scale) significantly undercut its revenue-sharing terms, betting much of its base will keep using Google regardless. Macquarie has estimated Google provides Apple with a 75% cut on Safari-driven iOS search ad revenue.
- On iOS, users could keep relying on Google search in the event of a Yahoo deal by manually selecting Google as their Safari search option (should Yahoo become the default), or by using Google's popular search and Chrome apps. StatCounter estimates Google had a 92.2% October mobile/tablet search share to Yahoo and Bing's combined 6.5%.
Nov. 21, 2014, 12:46 PM
- Believing Satya Nadella has done little to address core problems, Jefferies' John DiFucci (formerly with JPMorgan) has launched coverage on Microsoft (MSFT -1.5%) with an Underperform rating and $40 target, as part of a broader software stock launch. Shares have turned negative after opening higher.
- "We believe the 'new' Microsoft will look very much like the 'old' Microsoft for some time," says DiFucci in his note. He observes the majority of Microsoft's op. profit is still tied to PCs (ed: much of it isn't directly linked to PC sales, but to Office subscriptions/volume licenses), and sees Chromebooks and cheap tablets eating into Windows' computing share.
- Going into today, shares had risen 56% since Steve Ballmer announced his retirement plans in August 2013.
Nov. 19, 2014, 5:20 PM
- Per the terms of a new 5-year deal with Mozilla, Yahoo (NASDAQ:YHOO), whose search engine is powered by Bing (NASDAQ:MSFT), will provide "the default search experience for Firefox in the United States on mobile and desktop." The deal also "provides a framework for exploring future product integrations and distribution opportunities to other markets."
- No word on revenue-sharing terms. Google (NASDAQ:GOOG) has long been Firefox's default search provider. Google's deal was last renewed in 2011, apparently on more favorable terms to Mozilla.
- Though its browser share has fallen in recent years, thanks to both Chrome's gains and a relatively weak mobile position, StatCounter estimates Firefox still has a 12% combined PC/mobile/console browser share globally. Chrome's share is at 41%, and Internet Explorer's at 13%.
- StatCounter puts Yahoo and Bing's combined global search share at just 7.4%. However, comScore puts their combined U.S. PC search share at 29.8%.
- YHOO +0.8% AH.
Nov. 13, 2014, 8:37 AM
- The WSJ reports Microsoft (NASDAQ:MSFT) has reached a deal to buy Israeli cybersecurity/identity-protection software firm Aorato for ~$200M, and plans to announce it today. The paper reported in July a deal was close.
- Aorato's products complement Microsoft's Active Directory enterprise authentication/ID-management software service, since they analyze Active Directory interactions to create user profiles and detect suspicious activity. There could also be synergies with the cloud-based Azure Active Directory service.
- In its latest effort to grow its developer base (previous) and support rival platforms, Microsoft is open-sourcing the server stack for its.NET software framework (underpins many Windows apps), and allowing developers to write server/cloud-based .NET apps for Linux and Mac OS. The move could help .NET better compete against alternatives such as Ruby on Rails and PHP.
- Microsoft has also: 1) Launched a free version of its mainstay Visual Studio 2013 app development suite for non-enterprise users. 2) Previewed Visual Studio 2015, which the company says is "built from the ground up with support for iOS, Android and Windows."
- Microsoft says it will "shortly" reach 10M Xbox One sales, and that sales have tripled since a $50 price cut went into effect on Nov. 2. The latest figures still leaves the One's total sales behind the 13.5M seen by the PS4 as of the end of Q3.
- The pickup in Xbox One sales is a positive for CPU/GPU supplier AMD, which was estimated by IHS last year to receive $110 per unit.
- Update: Microsoft has confirmed the Aorato acquisition. "We are making this acquisition to give customers a new level of protection against threats through better visibility into their identity infrastructure."
Nov. 11, 2014, 9:59 AM
- Microsoft (MSFT -0.3%) has launched the Lumia 535, a low-end Windows Phone that (unlike prior Lumia models) features Microsoft's brand rather than Nokia's. The device sports a 5" 960x540 display, a 1.2GHz., quad-core CPU (Qualcomm Snapdragon), 1GB of RAM, and a 5MP front camera with a wide-angle lens (good for selfies).
- On the other hand, the emerging markets-focused 535 lacks a 4G radio. The phone initially launches in Asia, and will later be brought to the Middle East and Russia. It goes for only ~€110 (~$136) unsubsidized.
- Microsoft sold 9.3M Lumias in calendar Q3, up slightly Y/Y. Strategy Analytics estimates Windows Phone had just a 3.3% Q3 smartphone unit share, falling from 4.1% a year earlier as industry shipments rose 26.7%.
- Microsoft's popular Lync VoIP/unified communications software platform (has been seeing 10%+ growth) has been rebranded as Skype for Business. It adds new client, server, and cloud versions of the platform will launch in 1H15. New features include a revamped UI, video calling support, and native interoperability with 3rd-party videoconferencing systems.
- During a recent talk, exec Julie Larson-Green stated the Cortana virtual assistant would eventually launch on non-Microsoft operating systems. That fits with a number of other moves made during the Satya Nadella era.
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