Game Microsoft
In Microsoft (MSFT)
Microsoft is a difficult situation for me to evaluate. I think the company still has much growth ahead in some areas. But that depends on where management wants to take it.
There are three main activities that are already well developed: Windows, Office and servers.
The moat of the first two are wide. The moat of Windows is huge.
The business model in operating systems is large. You keep improving every few years, the hardware is not necessary to go so you can find things to change and get people to buy the next step. It is incredibly profitable.
I think the new release (Vista) will be bigger than people expect (eventually) as it allows the cross selling other Microsoft products (although we shall see). I hope the press will be very negative, at least until after the launch, because there's always some errors and delays.
Games
Finally, video games will be a big business for Microsoft. I hate economics console business, but the love of the economics of publication (and development) part of things.
I'm sorry to see that Microsoft did not use its cash pile to buy an established business here (editors were cheapest on the market several years ago, a cash deal that all worked well. Now everyone thinks that video games will be the next big thing).
The console wars are good for Microsoft. The two keys to establish a dominant position of the console being launched first and get good games on their platform. Let's see how Sony (SNE) is this round, but I hope it is the big loser.
Nintendo may surprise here. I think the Xbox 360 and Nintendo's new console (Wii) will do very well. It will be interesting see the breakdown of the consoles in both domestic and foreign markets. I think Sony has abroad remains strong, but could be in a much poorer position the end of this round than they were with the PS2.
Search
In the long term I'm optimistic about the search. I think Google's position is much weaker than most people think. I do not think Microsoft will be the only beneficiary here.
Search is a very natural cross-selling Windows. That is the direction things seem to be in the lead (the combination of searching online and desktop). For future growth in terms of market share I think Microsoft is in a better position than any of Yahoo (YHOO) or Google (GOOG).
I also think we could see a couple of other (much part unknown) search engines to gain some action.
I think Google's strength is its brand. Its helps advertisers control over users. No think there is a lock in users. Besides, I think Google has not been well positioned to do just about anything outside of search keywords.
I hope to see lots more things in the way of intelligent social search inspired. Years from now, much of the search will have to help you find what you did not know I wanted to find.
Google is dominant in a different market: helping you find what you know you want to (but not know the name and location). The two types of search are very different. Both are important, but the growth of other forms of search is coming from a smaller base and probably will be integrated with keyword searching. Google has more to lose here.
Other Devices
Microsoft wants to perform well on mobile devices and on your TV. Compared with competitors, is very strong in these aspects.
The strategy seems to be that I would support – to control the contact point initial, which uses a program and then only venture into the actual implementation or the content side of the business that is profitable to do so. In the video games are being very profitable. In other areas it is less likely to be very profitable.
I hope to see more generic, web-based applications. These will be less profitable for everyone. Office should hold up well, but not as well as Windows. Basically, Microsoft has to take what he has in the PC and import it to televisions, portable devices, consoles, and the Web.
That should be the strategy. I think it's the strategy. These are independent companies that must be broken to unlock creativity (as some have suggested). Rather, the profit potential for each is much higher by Microsoft. If you take these separate pieces that are worth very little. Not only would the three companies I started talking and the console / games business.
Internationally, it will be natural growth of Microsoft's dominant firms. There will be a growth rate enormous, but it will be strong and require virtually no additional investment for sure.
Obsolescence issues
In general, I like the future much more software than hardware, because the marginal gains in the quality of hardware to slow substantially in coming years.
The question is what can be done mathematically in terms of increasing specifications, is what this means for the user. We are reaching a point where the individual user not directly see the benefits of increased hardware performance as clearly as it did in the past.
Much of the research in this area will only will reduce prices and benefit the memory-intensive firms – will not provide as much of a 'wow' factor for the power user.
This is especially true in games. The situation in desktop applications is such that improving the software design is where most of the profits will come.
Computing power is simply not a scarce resource for most individuals sitting at home or in a cubicle. The progress that some users benefit much and drip to the end user (often via the Internet) through quick response and cheap services. But that's a change barely visible.
You will see something similar to the kinds of things here that you see in the brokerage business. It will not be obvious, because price competition will not be as big in the software.
In general, look at the price to get something electronically. That is very different from what we have seen in recent decades, which also progress that had attracted new users, because it allows developers to do something different, not just cheaper.
This is a very long-term trend I am concerned. It could weigh heavily in a company like Dell (DELL), since PC are quite durable, once the obsolescence rate is slowing, sales have to break the cycle lengthens.
Management
I think Microsoft management is absolutely the best in the business. In fact, I think is one of the best in any business.
It would be difficult for me to find more than a handful of people who prefer to manage a business that he owned part of. I also believe that the current system is a good idea.
There is enough of a line between current operations and future investments in the President / CEO of division that investors probably get the most out of the brightness of the President in this way.
Everyone underestimates Bill Gates. It's easy, because he makes his big win for some time. But he is interested in building something lasting. I trust him more than anyone in the technology without a question. He always impresses me if you are talking about their own industry or some other topic. He has exactly the right kind of mind for someone running a business in the long run is a concern.
Qualitatively, I think Microsoft scores close to perfection. I could cite statistics on profitability, but not because you know they are better that almost any business on the planet – and a large diversion of resources for future investments that are required to maintain the cash cow Windows and wide moat franchise.
Poll
The valuation is a bit more worrisome. Microsoft is not the point on a base / EBIT EV where there be buying the stock if it runs the risk of not extraordinarily profitable growth in the future. In other words, the current price, obviously makes a link bad.
The key is earnings growth. I think you have to believe MSFT will have a real future in the search, gaming and non-PC devices, which fuel future highly profitable growth.
I think that the future is there. For really large cap action (such as $ 10 million or more) is almost as attractive as anything else on the planet right now – and certainly more attractive is the U.S. action any type of big business. While Intel (INTC) and Dell are cheap looking, do not like nearly as much. Dell is an interesting situation, but I do not understand the business well enough.
I have a better idea of where MSFT goes – and like it.
Conclusion
I do not own shares of MSFT. I will not buy any. Not normally own such large stocks. I prefer much smaller companies, because the mispricings tend to be more out of control. You will not see MSFT trading at an EV / EBIT of 7.5 or so, but Sometimes these opportunities in the quality of small (high) firms.
There are plenty of possibilities to find wild mispricings without much of the future is a concern. These are situations that prefer to invest, because companies like MSFT awfully big of an anchor with the amount of capital they have – also tend to be less likely to be wildly incorrect price.
However, if the company had a market capitalization of over $ 10 billion and sustain it throughout life was going to buy Microsoft here without hesitation.
About the Author
Geoff Gannon writes a daily value investing blog and produces a twice weekly (half hour) value investing podcast at
Gannon on Investing
Inside Gaming: Microsoft X10 & Bad Company 2 Single Mode: 2/3/10 (Machinima Video Game News) S06E08
|
|
15-Microsoft Xbox – Game consoles – “Broken” As Is $699.99 |
|
|
20x NEW WIRELESS GAME CONTROLLER for MICROSOFT XBOX 360 $633.11 |
|
|
20x NEW WIRELESS GAME CONTROLLER for MICROSOFT XBOX 360 $633.11 |
|
|
Microsoft Xbox360 S 250GB, Kinect Ready, 6 Games & $499.99 |
|
|
Microsoft Xbox 360 (60 GB) MINT CONDITION with 12 games $459.99 |
|
|
Microsoft Xbox 360 Elite System 120Go + 9 Games Mint $399.00 |
|
|
Microsoft XBOX 360 Premium Game Console $395.00 |
|
|
Microsoft Xbox 360 Pro System (60 GB) + 11 GAMES & MORE $390.00 |
|
|
New Microsoft Xbox 360 250GB Elite Game Console System $369.90 |
|
|
New Microsoft Xbox 360 250GB HDMI Game Console System W $369.90 |
|
|
Microsoft Xbox 360 Pro 20GB Bundle w/HD DVD & Games $350.00 |
|
|
Microsoft Xbox 360 Arcade Plus 22 games $350.00 |
|
|
Microsoft Xbox 360 + Steering Wheel + 8 Games – Cheap!! $350.00 |
|
|
Microsoft Xbox 360, 4 Controlers, 10 Games + More Acc. $349.00 |
|
|
Microsoft Xbox with Steering wheel/pedals and 75 games. $325.00 |
|
|
Microsoft Xbox 360 Elite – 120 GB Black With 2 Games $325.00 |
|
|
10x NEW WIRELESS GAME CONTROLLER for MICROSOFT XBOX 360 $316.86 |
|
|
10x NEW WIRELESS GAME CONTROLLER for MICROSOFT XBOX 360 $316.86 |
|
|
Microsoft Xbox 360 250GB Console w/ HDMI cord & 2 games $309.99 |
|
|
Microsoft Xbox 360 Pro System (60 GB), 5 Games, 3 contr $300.00 |
|
|
Brand New Microsoft Xbox 360 Slim 250 GB + 11 games! $300.00 |
|
|
Microsoft Xbox 360 Slim (250 GB) 2 cont.9 games +more $300.00 |
|
|
Microsoft Xbox 360 (20 GB) (NTSC ) 27 Games $300.00 |
|
|
Microsoft XBOX 360 PRO GAME System 60gb HDMI SEALED NEW $299.94 |
|
|
Microsoft Xbox 360 Elite (120 GB) With 9 Games! WOW! $299.00 |
|
|
Microsoft Xbox 360 Pro System – Game console – 60 GB $295.00 |
|
|
Microsoft Xbox 360 20 GB w/Tons of accessories/ games $284.99 |
|
|
Microsoft Xbox 360 Go Pro 60GB System, Game Console $279.99 |
|
|
10x NEW WIRELESS GAME CONTROLLER for MICROSOFT XBOX 360 $285.74 |
|
|
Microsoft Xbox 360 Pro System (60 GB) With 6 Games $275.95 |
|
|
Microsoft Xbox 360 (20 GB) with GAMES, WIRELESS ADAPTER $275.00 |
|
|
Microsoft XBOX 360 Elite120 Gb, with 2 Free Games! $274.71 |
|
|
Microsoft Xbox 360 Elite (120 GB) 7 Games + Assesories $270.00 |
|
|
Microsoft Xbox 360 System w/ Games $255.00 |
|
|
Microsoft Xbox 360 Pro + 14 games + Accessories! $250.00 |
|
|
Microsoft Xbox 360 Elite (120 GB) And 11 Games $250.00 |
|
|
Microsoft Xbox 360 (60 GB) (HDMI) games controllers $250.00 |
|
|
Microsoft Xbox 360 Elite – 120 GB Black With 2 Games $250.00 |
|
|
Microsoft Xbox 360 white console with cables and games $250.00 |
|
|
MICROSOFT XBOX 360 ELITE (120 GB) HDMI With 4 Games!! $250.00 |
|
|
Microsoft Xbox 360 Go Pro 60GB System, Game Console $249.99 |
|
|
B4J-00122 Microsoft Xbox 360 Elite System – Game $244.55 |
|
|
Microsoft Xbox 360 4GB, WiFi, Game Pad, Gaming Console $239.99 |
|
|
Microsoft Xbox 360 Elite System 120 GB Black + 2 Games $239.99 |
|
|
Microsoft XBOX 360 LIVE Arcade Game Console $229.99 |
|
|
MICROSOFT XBOX 360 PREMIUM GOLD PACK SYSTEM & GAME LOOK $229.95 |
|
|
Microsoft Xbox 360 20GB Video Game System Bundle $229.95 |
|
|
B4J-00001 Microsoft Xbox 360 Game console $227.91 |
|
|
Microsoft Xbox 360 Arcade-games & accessories $225.00 |
|
|
Microsoft Xbox 360 Elite Game System – 120GB Hard Drive $219.99 |
|
|
Microsoft Xbox 360 Halo 3 Special Edition Game Console $219.99 |
|
|
New Microsoft Xbox 360 Arcade Console Bundle+Halo3 Game $219.98 |
|
|
B4J-00122 Microsoft Xbox 360 Elite System – Game $219.55 |
|
|
Microsoft Xbox 360 System 60 GB HDMI Console + 2 games $210.00 |
|
|
New Microsoft Xbox 360 Arcade Game Console Sealed Box $209.95 |
|
|
Microsoft Xbox 360 (20 GB) BUNDLE!!!!!! 16 Games! $205.00 |
|
|
Microsoft Xbox 360 S 250GB and Games PLUS Extras!! $202.50 |
|
|
882224441520 Microsoft Xbox 360 – Game console $202.23 |
|
|
Microsoft Xbox 360 Game System with 4 Games $200.00 |
|
|
Microsoft Xbox 360 Elite (120 GB) W/GAMES $200.00 |
|
|
Microsoft Xbox 360 (60 GB) 2 controllers and Games $200.00 |
|
|
Microsoft Xbox 360 20GB HDMI 20 Games Warranty Box PICS $200.00 |
|
|
Microsoft Xbox 360 / accessories and games $200.00 |
|
|
Microsoft Xbox 360 Arcade with games and extras $200.00 |
|
|
Microsoft Xbox 360 Elite (120 GB) w/ A Free Game too! $200.00 |
|
|
2 Microsoft Xbox 360 Consoles w/ 7 games (20 GB) (NTSC) $200.00 |
|
|
Microsoft Xbox 360 Arcade W/7 games 256 mb card $200.00 |
|
|
Microsoft Xbox 360 Elite (120 GB) with 5 games included $199.99 |
|
|
Microsoft Xbox 360 Game System HDMI Console 120GB $199.99 |
|
|
Microsoft Xbox 360 Game System HDMI Console 120GB $199.99 |
|
|
Microsoft Xbox 360 Elite System Game console HDMI 120GB $199.99 |
|
|
MICROSOFT XBOX 360 ELITE 120GB HARD DRIVE W/GAME’S $199.95 |
|
|
Microsoft Xbox 360 Premium Edition System, Game Console $199.95 |
|
|
NEW Microsoft Xbox 360 Arcade Console System w/ 5 Games $199.95 |
|
|
Microsoft Xbox 360 Elite 120 GB + Madden Games and More $199.95 |
|
|
Microsoft Xbox 360 Elite System – Game console – bla… $199.00 |
|
|
Microsoft Xbox 360 Elite 120GB Black HDMI + 2 Games $199.00 |
|
|
Microsoft Xbox 360 Elite 120 GB 7 games 2 Wireless Cont $190.00 |
|
|
Microsoft Black Xbox with 4 controllers remote 30 games $189.99 |
|
|
Microsoft Xbox 360 Elite System Game console HDMI 120GB $189.99 |
|
|
Microsoft Xbox 360 Elite Console Game Console $188.99 |
|
|
Microsoft Xbox 360 Elite Console Game Console $185.99 |
|
|
Microsoft Xbox 360 Elite Console Game Console $185.99 |
|
|
Microsoft Xbox 360 (60 GB) (HDMI) with 6 games $185.00 |
|
|
Microsoft XBox 360 Arcade with 6 Games SHIP FREE $185.00 |
|
|
Microsoft XBox 360 Arcade with 6 Games SHIP FREE $185.00 |
|
|
Microsoft XBox 360 Arcade with 6 Games SHIP FREE $185.00 |
|
|
Microsoft XBox 360 Arcade with 6 Games SHIP FREE $185.00 |
|
|
Microsoft Xbox 360 Pro HDMI 20GB w/ 3 Games System $184.95 |
|
|
B4J-00174 Microsoft Xbox 360 Pro System – Game console $182.57 |
|
|
Microsoft Xbox 360 Elite (120 GB) Bundle w/ 38 Games!!! $182.50 |
|
|
Microsoft Xbox 360 120 GB EXTRAS+GAMES $180.00 |
|
|
Brand NEW Microsoft Zune HD MP3 Video FM WiFi Game 16GB $179.95 |
|
|
XGX-00001 Microsoft Xbox 360 Arcade – Game console $179.00 |
|
|
MICROSOFT XBOX 360 PACKAGE W/ 2 CONTROLLERS AND 6 GAMES $177.50 |
|
|
Microsoft Xbox 360 with 10 Games and Accessories $175.00 |
|
|
Microsoft Xbox 360 Elite (120 GB) Unused w/ 3 Games $175.00 |
|
|
Microsoft Xbox 360 Fall Bundle! Console,Games, & more!! $175.00 |
|
|
Microsoft Xbox 360 (120) Black w/ 4 games $175.00 |
|
|
Microsoft Xbox 360 Pro (20GB), 10 Games, 2 Cont, HDMI $174.99 |
|
|
Cohesion BandBox Gaming Storage and Furniture Ottoman (Black) $119.99 Hide the band by keeping your instruments neatly and stylishly stowed with this gaming storage ottoman from Cohesion. Keep your instruments organized and accessible. The black synthetic leather exterior offers a sleek appearance that will be suitable for any room in the house. The ottoman opens to reveal generous storage space for your instruments so they’re always organized and accessible. The … |
|
|
Super Elf Bowling Collection $4.82 This ain’t your Daddy’s Elf Bowling!Product InformationIt’s the biggest and baddest bowl-o-rama yet. Santa’s elves have gone onstrike so polish up your shiny Christmas ball and help Santa show those greedylittle union elves what the true meaning of “Strike” is.Hold on to your stockings…. Those bawdy naughty wise-cracking elves areback in this collection of 5 of the wackiest adventures ever. Elf… |
|
|
Mavis Beacon Teaches Typing 12 (Jewel Case) $9.99 Mavis Beacon Teaches Typing 12 (Jewel Case)… |
|
|
Microsoft Children’s Miracle Network Games Bundle $16.99 Microsoft and Childrenâs Miracle Network are working together to ensure that children have the specialized care they need and deserve in our local communities by creating this special value pack of family games. 100% of Microsoftâs net proceeds from this Family Games pack will go to support local Childrenâs Miracle Network Hospitals…. |
|
|
CINDERELLA’S DOLLHOUSE LG $4.98 Create the dollhouse of your dreams!Product InformationYou can decorate an array of fairytale settings- from the tiny Mouse House tothe lavish Royal Palace where Cinderella meets her handsome Prince. You’ll findhundreds of accessories to help you transform each room magically likesomething straight out of the story book!Activities Include Ballroom: Elegantly decorate the Palace for a gala ball. … |
|
|
Escape from Monkey Island $24.01 This software is BRAND NEW. Packaging may differ slightly from the stock photo above. Please click on our logo above to see over 15,000 titles in stock…. |
|
|
Fight Back:Emergency Self-Defense [VHS] $9.80 This software is BRAND NEW. Packaging may differ slightly from the stock photo above. Please click on our logo above to see over 15,000 titles in stock…. |
|
|
Surfacing [Vhs Tape] Joseph Bottoms, Kathleen Beller, Based on Novel By Margaret Atwood A Hazardous Search Becomes A Passionate Struggle. Based on Margaret Atwood’s best seller, SURFACING plunges you into the mysterious depths of the hostile Northern wilderness. Following her father’s puzzling disappearance, Kate (Kathleen Beller), and her city-bred companions brave the untamed backwoods in a desperate search for him. However, the harsh environment becomes a dangerous catalyst for t… |
|
|
Eclipse SD-9313 30-in-1 Video Game Screwdriver Set for Nintendo, Microsoft, Sony & Sega Gaming Consoles $31.00 Soft touch, elastomer resin, non-slip handle; Also includes 4.5″ extender for 4mm bits and adaptor for 4mm conversion to 1/4″ ==== The Eclipse SD-9313 Video Game Screwdriver Set is a complete kit that allows the opening of most branded Video game systems and happy meal toys without any damage such as Microsoft, Nintendo, Sony, Sega handhelds, video games, and more. === For use with: Microsoft: XB… |
|
|
Master Levels for DOOM II CD ROM, PC compatible. Requires full version of Doom II to operate…. |
