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  1. #1
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    Microsoft should consider selling Xbox and Bing businesses, says key analyst

    Microsoft made the case for the future of the Xbox at a splashy unveiling last week, but one well-known Wall Street analyst isn’t convinced the console business is even worth keeping.

    Rick Sherlund, the Nomura Equity Research analyst who has covered the Redmond company since it went public, says in a report this morning that the Xbox “doesn’t seem like a good enough business for Microsoft to focus on.” He says the company should consider shopping the Xbox business to a consumer electronics company such as Samsung.

    Sherlund also says in the note that Microsoft should look into selling its Bing search engine to Facebook or Yahoo, reducing its substantial operating expenses and generating revenue instead from referring search traffic to the buyer.


    Those are two of the more attention-grabbing assertions in the report, in which Sherlund says the potential for change at Microsoft is increasing. He writes, “There may be a shift in the wind upcoming for Microsoft, with shareholders potentially demanding a greater say in the direction of the company and how it might be run to drive a better return to shareholders.”


    Microsoft isn’t commenting on Sherlund’s analysis. In general, the company has made the case that the Xbox and Bing businesses have strategic value beyond their short-term contribution to (or subtraction from) the bottom line. Microsoft’s Frank Shaw last week outlined the company’s view of Xbox One as a hub for a variety of Microsoft services in the living room.


    As part of his report, Sherlund says Nomura is increasing its price target for Microsoft to $38, from the previous $32, “not on fundamentals but rather on our view that there may be much more focus on shareholder value as a result of potential shareholder initiatives.”


    Sherlund points to catalysts including the disclosure by ValueAct Capital that it has acquired about 1 percent of Microsoft’s shares. He writes, “With Microsoft’s shareholders likely frustrated with the share price, we think there may be reason to expect that ValueAct could leverage a 1% position with the support of others to advance their agenda for change.”


    ValueAct’s Jeffrey Ubben has said he wouldn’t publicly campaign for changes in Microsoft’s strategy, but he also believes Microsoft should make Office more widely available beyond Windows. Sherlund echoes that sentiment in his report this morning.


    Sherlund writes, “We believe there are many iPad and Android tablet users that would be willing to pay a monthly subscription fee for Office were it delivered on these platforms. Since Office is not available, users are finding substitutes such as Evernote, DropBox, Pages or Google Docs etc. This is bad – Office is being disenfranchised on the hottest growth platforms.”


    Here is more from Sherlund’s comments about Xbox …

    Xbox is one of the areas of success for Microsoft and is cool to consumers, but it is perhaps time to assess whether this can ever be material to the overall company and might be more leveragable to a consumer-oriented company such as Samsung. Perhaps they would be willing to pay several billion dollars for this to leverage their substantial consumer electronics business? Shareholders might want to know if they could possibly be better off if Xbox were spun out as a separate company or sold. Either way, it is not that material to the overall valuation of Microsoft and will not likely determine the success of Microsoft going forward; it’s just not profitable enough to move the needle that much at the company.
    And an excerpt from his comments on Bing …

    While we like Bing as a service, we need to look at this from an ROI and strategic perspective. If Microsoft could sell or even give Bing to Facebook or Yahoo and eliminate its operating costs and get a Traffic Acquisition Cost (TAC) back to monetize the traffic that Windows/Internet Explorer or Xbox in the living room can drive to Bing, this might generate perhaps $1.0bn of profit and positive FCF rather than be a drag of a similar magnitude. If this were returned to shareholders, this could add nearly 1% incremental to the dividend yield, in our estimation.
    Samsung the best option? What do you all think?

    http://www.geekwire.com/2013/sherlun...ng-businesses/

  2. #2
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    Nothing wrong with considering it.

  3. #3
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    I would if I were microsoft, they clearly don't know how to handle there platform.....

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    Quote Originally Posted by Bitbydeath View Post
    Samsung the best option? What do you all think?
    That would probably work, but sony would sure hate that because Samsung has shown them no mercy in the TV market....lol


    I would if I were microsoft, they clearly don't know how to handle there platform...
    I don't know about that. Xbox 360 numbers say otherwise.

  5. #5
    Soldier 95B
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    Xbox is a cash cow and a huge success and continues with X1. No reason to sell it off. Bing on the other hand? Lol nobody Bings anything. It's all google all the time.

    If anything MS should sell office. It's on the way out.

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    It's not whether MS can make a profit out of xbox or bing, but whether the money they invest there would be better spent on their core products (Windows and Office). It feels MS has lost its focus on the past few years, so it might make sense to concentrate on their strengths instead.

    Quote Originally Posted by Soldier 95B View Post
    Xbox is a cash cow and a huge success and continues with X1. No reason to sell it off. Bing on the other hand? Lol nobody Bings anything. It's all google all the time.

    If anything MS should sell office. It's on the way out.
    I slapped my forehead so hard I think I fractured it. MS will sell the Windows division before it sells Office.

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    Sell the Xbox business? I have worked on Financial Services, and there was a time people were talking along the lines of "MS should take the console business off the division because it is the one thing that makes money on the section, then restructure the other business." Selling the Xbox business makes absolutely no sense.

    As for Bing, it is a strategic venture, it gives MS a small presence in that market segment, it may not be a huge player, but for a software giant like MS that has online ambitions being intertwined with its core business, not having Bing would be foolish.
    xbox live: AcrylicAltair44

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    I thought the Xbox 360 made Microsoft a tonne of money, more than the PS3 made Sony. Just because Microsoft got some bad press this past week doesn't justify selling a huge part of there business. Madness.

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    Just some analyst sprouting nonsense. They don't have a firm grasp of the industry.







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    Quote Originally Posted by Exunionx View Post
    I would if I were microsoft, they clearly don't know how to handle there platform.....
    indeed, some company's do not know how to handle there platforms.

    A new report from the investment banking firm Jefferies delivered a harsh assessment of Sony’s electronics business. “Electronics is its Achilles’ heel and, in our view, it is worth zero,” wrote Atul Goyal, consumer technology analyst for Jefferies, in the report, released this week.
    “In our view, it needs to exit most electronics markets.”
    The maker of the Walkman and the Trinitron without electronics? What would it do?
    Although Sony sells hundreds of products as varied as batteries and head-mounted 3-D displays, it so happens that Sony’s most successful business is selling insurance.
    http://www.nytimes.com/2013/05/28/business/global/sonys-bread-and-butter-its-not-electronics.html

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    Microsoft should consider selling Xbox and Bing businesses, says key analyst

    I think MS would rather expand than sell the Xbox brand.


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    lol what does he mean by "should"?

    #IndieStation4 and proud of it.

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    Quote Originally Posted by Soldier 95B View Post
    Xbox is a cash cow and a huge success and continues with X1. No reason to sell it off. Bing on the other hand? Lol nobody Bings anything. It's all google all the time.

    If anything MS should sell office. It's on the way out.
    Office on the way out? people still uses excel spreadsheets alot. I know as an analyst I can't do my job without spreadsheets. lol




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    Quote Originally Posted by Sub-stance1 View Post
    I don't know about that. Xbox 360 numbers say otherwise.
    Market position went from first place to third over the course of the generation.

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    Office on the way out? I almost fell off my chair laughing after reading that.
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  18. #16
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    Quote Originally Posted by Serinous View Post
    Office on the way out? people still uses excel spreadsheets alot. I know as an analyst I can't do my job without spreadsheets. lol
    Yeah, Office makes more than enough money to keep. Don't know a single company that doesn't use it.


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    Yes... sell the Xbox division, there's no point on investing on it. Sony has already taken over and Nintendo is unstoppable.

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  20. #18
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    Quote Originally Posted by Lefein View Post
    Market position went from first place to third over the course of the generation.
    lol...says who. The way I look at it is that they improved on the original xbox numbers with the xbox360.

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    Quote Originally Posted by Lefein View Post
    Market position went from first place to third over the course of the generation.
    Did you type that with a straight face?

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    Quote Originally Posted by Sub-stance1 View Post
    lol...says who.
    Quote Originally Posted by Silver&black_Attack View Post
    Did you type that with a straight face?
    Quote Originally Posted by BBC News
    Microsoft will want to beat the performance of its Xbox 360 which was first to market but lowest on the global sales leaderboard.
    http://www.bbc.co.uk/news/technology-22556805


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    Quote Originally Posted by Lefein View Post
    I'll take that with a grain of salt until we hear an official word from MS or Sony.

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    Quote Originally Posted by Lefein View Post
    The 360 has put Microsoft in a good place, Sony once ruled with the PS2, and the original Xbox was a blip on the radar screen with 25 million units sold.

    The 360 is getting close to 80 million sold and Microsoft is just as much a player in the console business as Sony and Nintendo, in North America they have become more popular than Sony with console gamers.

    But the 360 was a bad business decision?

    Even if they end up technically in 3rd place world wide in units sold, they still made big moves this generation, and the console install base is more evened out this gen without one company dominating anymore.

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  26. #24
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    Quote Originally Posted by Silver&black_Attack View Post
    The 360 has put Microsoft in a good place, Sony once ruled with the PS2, and the original Xbox was a blip on the radar screen with 25 million units sold.

    The 360 is getting close to 80 million sold and Microsoft is just as much a player in the console business as Sony and Nintendo, in North America they have become more popular than Sony with console gamers.

    But the 360 was a bad business decision?

    Even if they end up technically in 3rd place world wide in units sold, they still made big moves this generation, and the console install base is more evened out this gen without one company dominating anymore.
    With MS in second place behind the Wii, I would say it has been very successful.

  27. #25
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    Quote Originally Posted by Soldier 95B View Post
    With MS in second place behind the Wii, I would say it has been very successful.
    Even if they weren't in second place they still would be successful IMO. Going from 20 million xbox sales to almost 80 million this gen is quite an accomplishment. Then you throw in where xbl started, to where it's going next gen, it's an even bigger accomplishment.

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