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Microsoft Corporation (MSFT)

  • May. 4, 2014, 4:11 AM
    • Steve Ballmer has become Microsoft's (MSFT) largest individual shareholder after Bill Gates sold another lot of shares, taking his holding to just over 330M vs more than 333M for Ballmer. Both men own around 4%.
    • Institutional investors Vanguard, State Street and BlackRock have slightly larger holdings.
    • Bill Gates will cease to own any Microsoft shares by mid-2018 if he continues to sell 20M shares a quarter, as he has been doing for most of the last dozen years
  • May. 2, 2014, 1:34 PM
    • Joel Greenblatt's screen looks to find stocks with high "earnings yield" - a high ratio of profits to enterprise value. Companies are further screened for a strong return on capital. When a stock scores well with both criteria, it's usually a good company being undervalued by investors.
    • For picking individual stocks, there are probably better methods, but as a group, Magic Formula names have vastly outperformed the broad market.
    • Although defense names have done well over the past couple of years, the Magic Formula continues to identify Northrop Grumman (NOC +0.2%), General Dynamics (GD +1.4%), and Raytheon (RTN +0.6%) as attractive. Firearm names Smith & Wesson (SWHC +0.8%) and Sturm Ruger (RGR +0.3%) also make the cut.
    • A number of videogame makers show up as well: Take-Two (TTWO +0.3%), Activision Blizzard (ATVI +0.2%), GameStop (GME +2.8%), and the struggling recent IPO King Digital (KING -0.3%).
    • Not too surprisingly, the Magic Formula also continues to like plenty of big-cap tech names: Cisco (CSCO -0.2%), CA, Inc. (CA -0.5%), Microsoft (MSFT -0.5%), Hewlett-Packard (HPQ -0.5%), and Apple (AAPL +0.1%).
    • Hardly market laggards, media names like Time Warner (TWX -0.8%), Viacom (VIA +1.4%), Omnicom Group (OMC), and Starz (STRZA +2.3%) also show up on the list, as do struggling multi-level marketers and for-profit education stocks: HLF, NUS, APOL, ESI, CPLA.
    • Punished by investors for not being as hot as they once were, Coach (COH +0.2%), Francesca' Holdings (FRAN +0.1%), and Gap (GPS -1.3%) are Magic Formula picks today.
  • May. 1, 2014, 8:48 AM
    • The recent tech stock selloff (a selloff that has hit richly-valued cloud software stocks especially hard) has led enterprise cloud storage/file-syncing leader BOX to delay its anticipated IPO, the WSJ reports. Though Box's March 24 public S-1 filing made it eligible to list as soon as early April, there's still no timetable.
    • Possibly adding to Box's caution: Its S-1 raised eyebrows on account of the huge losses that were disclosed. The company's sales/marketing spend for the fiscal year ending Jan. 31 single-handedly exceeded its revenue for the period by 34%.
    • The WSJ's report comes shortly after Microsoft (MSFT) fired a fresh salvo at Box and Dropbox by increasing the amount of storage provided by its OneDrive for Business by 40x to 1TB, and providing the solution for free to Office 365 ProPlus customers.
    • Box, which sells to ~40% of the Fortune 500 to varying degrees, has long argued its rich feature set and 3rd-party app support help it differentiate.
  • Apr. 28, 2014, 3:19 PM
    • With U.S. carriers trying hard to lower subsidy spend, Android (GOOG -0.8%) grew its U.S. smartphone share to 57.6% in Q1 from 49.3% a year earlier, thinks Kantar Worldpanel. Kantar also estimates Google's OS grew its EU5 share by 150 bps to 70.7% and its Chinese share by 810 bps to 80%, albeit while seeing its Japanese share drop 430 bps to 57.3%.
    • Five days after Apple (AAPL +3.6%) reported its Japanese sales rose 26% Y/Y, Kantar estimates the company's Japanese share rose 860 bps 57.6%. On the other hand, its U.S. share fell 780 bps to 43.7%, and its Chinese share 540 bps to 17.9%. EU5 share rose fractionally to 19.2%.
    • Strong phablet sales boosted Android's Chinese position: Over 40% of the country's March smartphone sales involved 5"+ devices. Can a 5.5" iPhone give Apple a lift?
    • Following recent share gains, Kantar thinks Windows Phone (MSFT +2.3%) is slumping due to low-end Android competition: Though its 8.1% EU5 share is up 160 bps Y/Y, it's down from recent 9%+ levels.WP's U.S. and Chinese shares are respectively at 5.3% (-30 bps) and 1% (-90 bps).
    • Meanwhile, with the Nokia deal closed, new Microsoft hardware chief Stephen Elop says Redmond is committed to supporting the low-end Nokia X Android phones. Elop: "Nokia X uses the MSFT cloud, not Google's. This is a great opportunity to connect new customers..."
    • While many tech momentum stocks get crushed, Apple and Microsoft are benefiting from a flight to safety. Apple has made fresh 52-week highs, and Microsoft is close to its 52-week high of $41.66.
  • Apr. 27, 2014, 2:48 AM
    • Microsoft (MSFT) intends to this week provide hints about exclusive programming for the Xbox, with shows set to include a series from Steven Spielberg based on the videogame "Halo."
    • Another expected program is "Every Street United," a documentary-style series about soccer that will start in time for the World Cup in June.
    • However, Microsoft faces a crowded field in which Netflix, Amazon, Hulu and Yahoo are producing original content for the Internet.
  • Apr. 25, 2014, 8:27 AM
    • "Beginning this summer, content from AOL brands like HuffPost Live, TechCrunch and Moviefone, as well as partner sites including ESPN, TMZ, Rachel Ray and Martha Stewart will be available on MSN and Bing Apps for Windows and Windows Phone helping both companies provide consumers with the best possible experience."
    • "The AOL video library will include content from all 15 AOL On channels and its 2014 slate of original series that will be unveiled next week at the Digital Content NewFronts."
    • AOL Video President Ran Harnevo: "The sheer scale of Microsoft’s (MSFT) network will help us reach a massive new audience and continue our climb.”
    • AOL +1.8% premarket
    • Source: Press Release
  • Apr. 25, 2014, 7:50 AM
    • Nokia (NOK) says the sale of its handset business to Microsoft (MSFT) has been completed after the companies agreed to leave two factories in India and Korea out of the deal.
    • NOK now expects the final sales price to rise slightly above the previously announced €5.44B ($7.52B).
    • Due to the ongoing tax dispute with Indian authorities which presumably was holding up the deal, NOK will operate the Chennai factory as a contract manufacturing unit for MSFT.
    • The sale ends the production of all NOK mobile phones by the former world leader, which has lost out in the smartphone race against Samsung, Apple's iPhone and cheaper manufacturers in Asia.
  • Apr. 24, 2014, 6:09 PM
    • Microsoft (MSFT) guides on its CC for FQ4 revenue of $20.4B-$21B, slightly below a $21.04B consensus. The company's FQ3 guidance proved conservative, and investors are assuming as much for its FQ4 outlook.
    • The revenue outlook for individual reporting groups: devices & consumer licensing $4.1B-$4.3B, D&C hardware $1.3B-$1.5B, D&C other $1.9B, commercial licensing $11B-$11.2B, commercial other $2.1B.
    • Xbox channel inventory drawdown is expected to impact D&C hardware, and a lower impact from Win. 7 upgrades caused by the end of XP support will affect D&C licensing. Commercial other is expected to see ~10% Q/Q growth on the back of cloud services (Office 365, Azure) demand.
    • Opex is expected to grow 4% Y/Y to $8.4B-$8.6B after adjusting for an EU fine. Capex is expected to total $1.5B (cloud investments), and unearned revenue to grow in line with seasonality. A tax rate of 18%-20% is forecast.
    • Microsoft's unearned revenue balance rose 14% Y/Y in FQ3 to $19.5B, topping guidance and exceeding FQ2's 12% clip. Bookings rose 6%, down from FQ2's 12%. The company's contracted but not billed balance closed above $22B (up over $1B Y/Y).
    • MSFT +2.7% AH. FQ3 results, details, earnings slides (.ppt), guidance (.ppt), prepared remarks (.doc)
  • Apr. 24, 2014, 4:24 PM
    • Microsoft's (MSFT) Commercial revenue grew 7% Y/Y in FQ3 to $12.7B, a little below FQ2's 10% clip. Devices & Consumer revenue grew 12% to $8.3B after growing 13% in FQ2.
    • Commercial Licensing (50% of revenue, 65% of gross profit) sales +10% vs. +7%, with Windows volume licensing up 11% and and key server productivity offerings (Lync, SharePoint, Exchange) collectively growing double-digits.
    • Commercial Other +31% vs. +28%; 100% and 150% respective increases for Office 365 and Azure fueled the growth. The division is now nearly 10% of revenue, but still makes up less than 4% of gross profit (lower cloud margins).
    • D&C licensing rose 1% after falling 6% in FQ2, thanks in part to stabilizing PC sales; Windows OEM revenue rose 4%.
    • D&C hardware +41% (thanks to Xbox One sales) ahead of the Nokia deal's closing; Surface revenue totaled just $500M. D&C Other +18%; Office 365 Home added almost 1M subs, raising its total base to 4.4M.
    • Drops in sales/marketing and G&A spend led opex to fall 7% Y/Y to $7.49B. That boosted EPS, as did $1.8B in buybacks.
    • Satya Nadella hosts his first CC at 5:30PM ET, guidance will be provided.
    • MSFT +2% AH. FQ3 results, PR.
  • Apr. 24, 2014, 4:05 PM
    • Microsoft Corporation (MSFT): FQ3 EPS of $0.68 beats by $0.05.
    • Revenue of $20.4B (-0.4% Y/Y) in-line.
    • Shares +2%.
    • Press Release
  • Apr. 24, 2014, 12:10 AM
  • Apr. 23, 2014, 5:35 PM
  • Apr. 23, 2014, 1:05 PM
    • The Verge reports the Start menu, beloved by many Windows 7 fans unhappy with Windows 8's big UI changes, will likely be added to Windows 8.1 courtesy of an August update.
    • Microsoft (MSFT -1%) announced on April 2 (at its BUILD conference) the Start menu will return, but didn't provide an ETA; past reports suggested it wouldn't come back until the launch of Windows 9 (expected in spring 2015).
    • The company showed off a revamped Start menu at BUILD that included live tiles, and also demoed a feature that allows (touch-optimized) Metro-style apps to appear within distinct windows in desktop mode. The Verge's sources state Microsoft is trying to get the latter feature ready in time for the August update.
    • Though PC sales are showing signs of stabilizing, Microsoft's efforts to gain tablet share via dual-UI Windows 8 systems haven't gone according to plan. Gartner estimates Windows 8/RT had a 2.1% 2013 tablet share, up from 1% in 2012.
  • Apr. 21, 2014, 10:40 AM
    • Microsoft's (MSFT -0.5%) acquisition of Nokia's (NOK -0.1%) Devices & Services unit will close on April 25.
    • Three changes have been made to the original deal: 1) Microsoft won't acquire Nokia's Korean manufacturing facility. 2) Microsoft will "manage" and Nokia social media sites for up to a year. 3) 21 Chinese employees of Nokia's Chief Technology Office will join Microsoft.
    • Chinese government approval (provided two weeks ago) ended the last major regulatory hurdle for the deal, which was originally set to close in March. Nokia stands to reap a $7.5B cash windfall that it might direct towards a mixture of acquisitions - the company has said it's focusing on smaller deals - and capital returns.
    • Microsoft, meanwhile, will have to get to work on turning around a business that posted a 29% Y/Y sales drop and a -7.3% non-IFRS op. margin in Q4, in large part due to plunging feature phone sales.
  • Apr. 18, 2014, 4:34 AM
    • Microsoft (MSFT) has sold over 5M Xbox One computer gaming consoles to retail shops since launching the device in November, well below the more than 7M PlayStation 4 machines that Sony (SNE) has sold since its product was launched last year as well.
    • Still, Xbox One sales have outpaced those of its predecessor, the XBox 360, by over 60% at the same point in time since launch.
    • The introductions of the Xbox and PlayStation 4 helped boost U.S. sales of consoles in March by 78% on year to $395M.
    • However, sales of videogames fell 28% to $432M, with revenue to multiplayer Internet games such as "World of Warcraft" dropping 19% to $84.8M.
    • Tickers: EA, ATVI
  • Apr. 17, 2014, 12:01 PM
    • IBM soundly missed revenue estimates for yet another quarter, thanks in large part to a 23% Y/Y drop in hardware/chip sales, and also reported a $3B Y/Y drop for its services backlog. SAP missed Q1 estimates due to a mixture of forex pressure and light software license revenue.
    • Microsoft (MSFT -1.4%), whose enterprise software ops compete against both IBM (middleware, databases, developer tools) and SAP (ERP/CRM apps, databases), is trading lower. As is IBM archrival H-P (HPQ -2.6%).
    • A few enterprise cloud software vendors, some of whom compete against SAP, are also off: JIVE -3.5%. N -2%. VEEV -1.9%. MKTO -2.2%.
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Company Description
Microsoft Corp is engaged in designing, manufacturing, selling devices, and online advertising to a global customer audience. Its products include operating systems for computing devices, servers, phones, and other intelligent devices.
Sector: Technology
Country: United States