MSFT

Microsoft Raises Its Dividend in a Big Way

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On Tuesday, Microsoft (click ticker for report: ), the largest weighting of our Dividend Growth portfolio, raised its quarterly cash dividend 22% to $0.28 per share, a $0.05 per share increase. The firm also announced a new share buyback program to the tune of $40 billion (replacing the previous $40 billion program set to expire at the end of this month). We are very pleased with the capital allocation decisions at the software giant and view any share repurchases below our intrinsic value estimate of the company ($46 per share at the time of this writing) as value-creating. We’re sticking with the firm as a core holding in our Dividend Growth portfolio and continue to believe Microsoft represents one of the biggest bargains on … Read more

Ballmer’s Last Big Move? Acquire Nokia’s Mobile Phone Unit

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Late Monday night, news broke that Dividend Growth Newsletter portfolio holding Microsoft (click ticker for report: ) will acquire Nokia’s (click ticker for report: ) device and services business for $7.1 billion. Though rumors about a deal have swirled since the two companies partnered for the Lumia, the timing is somewhat shocking, in our view. With CEO Steve Ballmer to depart within the next twelve months, we assumed he wouldn’t make any major splashes. Deal Details On the surface, this deal seems a lot like Google’s (click ticker for report: ) acquisition of Motorola Mobility. However, the details differ materially, particularly since Microsoft didn’t acquire the entire Nokia business. Further, Nokia will retain its patent portfolio and lease its patents … Read more

Shares of GameStop Look Expensive Even with Strong Guidance

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Retailer GameStop (click ticker for report: ) posted a steep decline in second quarter results that was overshadowed by a positive outlook for the back half of the year. Revenue fell 10.7% year-over-year to $10.4 billion, which was a bit better than consensus expectations. Earnings per share dropped 44% year-over-year to $0.09, which was also better than consensus estimates. Sales have been weak… Image Source: Valuentum, Company Filings Shares of GameStop are up 177% over the past year—a phenomenal increase given the steep same-store sales declines recently (shown above). Weakness didn’t moderate much in the second quarter, with same-store sales dropping 10.7% year-over-year. Of course, the rally in GameStop’s share price has little to do with what happened in fiscal … Read more

Ballmer to Leave Microsoft; Market Cheers

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Early Friday morning, Dividend Growth Newsletter portfolio holding Microsoft’s (click ticker for report: ) long-time CEO Steve Ballmer announced that he’ll be retiring within the next year. Despite solid revenue and earnings growth throughout his tenure, investors have called for his job for years as rival Apple (click ticker for report: ) stole the spotlight in the tech world. The Bad While the late Steve Jobs will be known for his hits, Ballmer will be best known for his misses. After Apple dropped the iPod, Microsoft came to market with the Zune after the war was long over. Apple then released the iPhone, and Microsoft wasn’t ever able to fund a credible competitor in the United States, but it did … Read more

Blackberry: Strategic Alternatives Signal Failure

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After the launch of its new phone and operating system came and went without much fanfare, smartphone maker Blackberry (click ticker for report: ) announced that it is exploring strategic alternatives for the company. Although most tend to associate strategic alternatives with selling the company, Blackberry is also open to partnerships and joint-ventures. Let’s start with the obvious inference out of this news: Blackberry 10 didn’t save the company. If this wasn’t clear enough when Blackberry reported weak results for its fiscal year 2014 first quarter, we think the situation is obvious now. Consumers, particularly of the high-end smartphone variety, simply do not want Blackberry products. The app world is far inferior to competitors Apple (click ticker for report: ) … Read more

Microsoft: The Surface Bust and Windows Slump

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Leading technology company Microsoft (click ticker for report: ) reported much weaker than anticipated fourth quarter results Thursday afternoon. Revenue performance was disappointing, expanding only 3% year-over-year on a non-GAAP basis to $19.1 billion, falling short of consensus estimates by several hundred million dollars. Earnings per share fell 10% year-over-year to $0.66, which excludes the impact of an inventory charge for the Surface RT tablet. Not surprisingly, this number was below consensus expectations. Though down substantially from the prior year’s quarter, free cash flow during the fourth quarter was $4.1 billion—equal to approximately 22% of revenue. For the full-year, free cash flow came in at $24.6 billion, which equates to 31% of revenue (an excellent showing). One of the material … Read more

What Does a Reorganization Mean for Microsoft?

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Thursday morning, software goliath Microsoft (click ticker for report: ) announced that its long-rumored reorganization plan has been finished, and the details are now available to the public (via an internal email from CEO Steve Ballmer). Some companies seem to go through countless ‘reorgs’ and the actual impact of such changes can often become obfuscated without ample evaluation and monitoring. The new Microsoft will have 4 engineering organizations, included within a total of 12 business functions. First of all, we think the premise of Microsoft’s reorg is spot on. The company is dividing into a dozen teams, but the logic behind the new teams looks sound. Perhaps the most obvious takeaway from the reorg is that individual devices such the … Read more

iOS Gets a Facelift: Apple’s Worldwide Developers Conference

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Day 1 has passed at Best Ideas Newsletter holding Apple’s (click ticker for report: ), and we were hit with a barrage of news. The most pertinent issue of the day was the introduction of iOS 7, the iPhone and iPad’s new operating system. It is the first major overhaul of iOS, and it signals the company is serious about bringing positive changes. In addition to a new mobile operating system, Apple unveiled iTunes Radio, a streaming music service to compete with the likes of Pandora (click ticker for report: ) and Spotify. Lastly, the firm unveiled its newest Mac Pro—one of the most innovative products we’ve seen from the company in the last year. iOS 7 Image Source: Apple … Read more

Microsoft Wants to Be the Apple of Your Living Room

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Earlier today, Dividend Growth Newsletter holding Microsoft (click ticker for report: ) finally unveiled its next generation console, the Xbox One. It wasn’t hard to tell that something big was around the corner for the next generation console, as the company had made some new hires including former CBS executive Nancy Tellem to head the firm’s content development initiative. Let’s take a look at the revelations and how it might impact the company. Steven Speilberg produces a Halo TV show As we mentioned earlier, Xbox’s move into exclusive content was not at all a surprise. In fact, we assumed we might hear about an exclusive TV show or movie even earlier. However, we were a little stunned to see legendary … Read more

Best Buy’s Comps Are Soft; Risk/Reward Not Compelling

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After shares nearly flirted with $10 in December, electronics retailer Best Buy (click ticker for report: ) has seen its stock more than double thanks to moderating sales declines and a store revamping strategy that displayed great promise. However, Best Buy’s first quarter fell short of consensus expectations as the Street got a bit ahead of itself in gauging the velocity of the turnaround. Revenue declined 10% year-over-year to $9.3 billion, which was well below consensus estimates. Adjusted earnings per share fell 58% compared to the prior year to $0.32 per share, which was a touch better than consensus expectations. Free cash flow swung to negative $179 million for the quarter, reflecting the firm’s inability to earn net income more … Read more