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Microsoft cut to market perform by FBR Capital

Wall Street continues to run away from Microsoft.

Today, it's David Hilal at FBR that's cutting Microsoft, downgrading the company, Marketwatch Reports.

He cites the common concerns of slowing PC-growth, and exploding growth of the iPad, and tablets. Hilal has the stock at a "market perform" rating, which seems to mean it's just going to be flat for a while.

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Shadow Flare2973d ago (Edited 2973d ago )

It means that Microsofts already nervous shareholders who have already voiced suggestions about Microsoft dropping their money wasting entertainment division (which includes xbox) to further voice their concerns. The sheer mass that Microsoft is pushing on kinect and the $500,000,000 advertising bill they have for it is evidence that 'kinect must succeed' and show some kind of profit for the division because otherwise it could realistically be cut.

Now if the xbox division was dropped, what would that mean to a gamer? Oh right...

Nineball21122973d ago

Well said, Shadow. Of course, this should be of interest to gamers. This is putting a lot of pressure on Microsoft to deliver (and honestly, I think Kinect will sell a boatload).

However, if I'm wrong and Kinect doesn't do well, I believe MS will have to seriously consider if this is a market they want to continue to invest in or whether they should pull out of it.

LostDjinn2973d ago

@Shadow:
What's funny is that MS reports earnings on Thursday. The $500 million in ad outlay will be part of that report.

However, the report after kinect launches will not contain the ad outlay (as it's part of a previous earnings report).

Make of that what you will.

Anon19742973d ago (Edited 2973d ago )

I've pointed out before, pressure on Microsoft from analysts and shareholders due to their Entertainment Division has been an ongoing issue. Even with the profits they've been able to sporadically put out - the last quarter reported they were back to posting loses, and even when they do post a profit the criticism is it's simply not a good return considering the investment being made. If I invest a billion dollars and make $100 - hey, I'm up $100 dollars but shareholders would rightly wonder what the hell I'm doing that I made so little considering what was put in.

Pachter said 360 sales would remain stagnant until Microsoft cut their "stubborn" price point and we've seen in the NPD numbers, when they cut the price on old consoles year over year jumped 118%. The next month it was roughly 65%. Then 37%. The effect is clearly wearing off as stock of old 360's start to dwindle. Analysts from the Enderle group said the entire Entertainment division is a “vampire” whose “profit, which wasn’t much, was massively offset by the economic cost it caused to the corporation.” Caris and Company warned a year ago when they cut their outlook on Microsoft that 360 sales were hurting "top line results".

All these, plus Ballmer's (one of the 360's biggest supporters in the company) weakening control on Microsoft means that the Entertainment and Devices division is very much in danger from a board member and shareholder revolt.

Longrod_Von_Hugendon2973d ago

Oh darn.

Apple's stock is 310.15 and holding. It's projected to go up to 500.

saint_john_paul_ii2973d ago (Edited 2973d ago )

Apple's stock is so good because They never had debt to begin with. and it will go higher whenever they come out with new devices that are popular to consumers

number472973d ago (Edited 2973d ago )

i wonder how many businesses microsoft thought was going to be HUGE.. like the Bings/Zunes/Vistas of the world.

*

Years ago in the pre-Internet era, AOL was the talk of the town, so Microsoft had to copy it with MSN. No money was made; no strategic advantage was gained.
*

Netscape was the rage for a while, so Microsoft threw together a browser and got in that business. The browser was given away for free. No money was made; the strategy got the company in trouble with government trustbusters.
*

During the early days of the Internet, new online publications appeared. Microsoft decided to become a publisher too, rolling out a slew of online properties including a computer magazine and a women's magazine. They were all folded.
*

Computer books became popular; Microsoft began Microsoft Press. After an early splash and success, the company soon lost interest and the division now languishes.
*

Teddy Ruxpin became a hot toy. Microsoft rolled out a couple of robotic plush toys, including the creepy Barney the Dinosaur who sang "I love you and you love me." The company soon lost interest and dropped the whole thing.
*

AOL-TV appeared, along with other device-centric TV-delivery mechanisms in the 1990s. Microsoft created a Microsoft-TV division as well as a device. It soon lost interest.
*

Adobe Photoshop became a huge success, so Microsoft hired Alvy Ray Smith to develop photo-editing software. Smith quit when the company lost interest in the idea.
*

Yahoo and Google showed that a search engine could be a money maker, so Microsoft copied that idea; it now has Bing.
*

Cloud applications are currently trendy, along with notions about software as a service. Microsoft decides to go into that business.
*

The Apple rolled out a MP3 player, the iPod. Microsoft came up with its own MP3 player, the Zune. The company also says it wants to stream music.

Kinect & the 360 will fit right into the pattern as soon as they kill the Xbox360 out, just like they killed the xbox.

Substance1012973d ago

No exclusives aside gears of war 3 next year, shows Microsoft isnt makin much money hence isnt investing in any more exclusives.

While Sony too is making losses, I wonder how long these companies can keep bleeding. The share holders have to put their foot down sometime. For Microsoft this seems to be the case now.

Zir02973d ago

The gaming devision isn't going anywhere, its the only part of their entertainment devision making profit. If anything they will split xbox into its own separate devision which has already been advised so it won't look bad next to things such as the Zune.

AtatakaiSamurai2973d ago (Edited 2973d ago )

that *ocker was *ing right!

he always said this kinect was ms last chance to convince shareholders to invest in another xbox. he always said there will be no more xbox after this gen

he sounded like he was just a hater when saying this stuff but now i see what he is taling about

i read some of his blog and he is right. if ms has no more xbox, only gaming software division then where will they put halo? definitely not on nintendo or pc alone.

now i see more people saying the same thing that many thought was impossible just 2yrs ago

he is right, halo will be on ps4 and pc. that dude was *ing right. i cant believe it.

gamingdroid2973d ago (Edited 2973d ago )

"He cites the common concerns of slowing PC-growth, and exploding growth of the iPad, and tablets. Hilal has the stock at a "market perform" rating, which seems to mean it's just going to be flat for a while.

FBR is joining Goldman, Janney Capital, and Barclays, who have all cut Microsoft's rating this month. All for the same basic reasons."

No mention of Entertainment Division. All they mentioned was the concern of ipad/tables taking over the declining PC market.

Not exactly what the spin doctors here ordered!

Not only that, but suddenly Pacther is right now!!!

Fishy Fingers2973d ago

Haha, here come the arm chair analysts.

dragonelite2973d ago

They are here to stay.
They have the pockets to stay they had no games that shit started in 2008 yet are still the 2nd in the console race.

Apocalypse Shadow2973d ago

overkill!!!

finish him!

lmao...ha.....

Active Reload2973d ago

Shadowflare, blind leading the blind. Why would MS's shareholders want MS to drop the XBOX? Stop spreading misinformation. The shareholders want the whole mobile aspect cut which would be the ghost chasing theory of dethroning Apple. Who in their right mind would get rid of a business that makes profit aka XBOX?

Da One2973d ago

Gears is owned buy Unreal.....MS never reveals what they have real early

AndrewRyan2972d ago

Is bad for every company/business right now. Unless you are Apple and can make your products look like they came from the heavens.

FanboyPunisher2972d ago (Edited 2972d ago )

MS is making money, they are just spending shit tons on advertising, and not putting it directly to enhance their product line.

This is a hard-core recession, potential depression. No one cares about software/PC hardware when they cant pay their bills. Meaning all around, its a bad investment with any company right now in IT. MS being the biggest ends up getting more attention drawn on them, when it doesnt represent the overall bad state of the industry.

But this is N4G, the OP knows that this will draw in all the sony douche bags (fanboys) anyway, then they'll paint up a black/white picture and continue on their circle jerk. When everyone/everything is hurting (Unless your a banker, whos gotten million dollar bonuses from the trillions on bailouts that were handed to them as candy.)

USE YOUR HEAD, F'N FANBOY! DAS NOOBEN!

HolyOrangeCows2972d ago

They just dropped half a billion dollars on a product that doesn't work all that well; they keep creating risks and dropping balanced, realistic departments.

Shareholders have every right to be worried.

+ Show (15) more repliesLast reply 2972d ago
zeddy2973d ago

why would anyone want to spend half a billion on anything? let alone a stupid gaming peripheral. its really quite ridiculous once you think about it.

pain777pas2972d ago (Edited 2972d ago )

Microsoft should have partnered with Sony and Nintendo to offer live and live games to their clients. Their talent is in software and they should have stuck to that. They would be making a killing if you have the option of a lower subscription fee than Xbox alone because they could have the service on all Sony and Nintendo devices. They would have had the whole WII, DS, PS3 and PSP audience and would have like a 100 million subscription not including getting indie devs to make geometry wars or a fable for WII and PS3 or something as downloadbles. At the same time their responsibility would be to boost the XBLA platform onto their proprietary OS as well as their mobile phones line. They would be sitting on cake laughing never having to compete and just supply content that everyone wants. They would have to deal with the tech specs of every platform however, they have had to do that for years and with their mobile experience they could deliver the service that Nintendo desperately needs and Sony would not have to skirt around patent after patent to get PSN up to snuff. M$ is partners with Sony for Vaio line anyway so I do not see what the big deal would be in M$ sticking to what they do best and increase there business in a much more creative way that they are used to. This whole innovative approach is not working out. Provide what you do best to all as you have always done or else. I have not upgraded all my PCs to Windows 7 yet. Why? I don't have to. XP and Vista are fine for what I use a PC for. On the go devices with versatility is the future and as were finding out its the other way into the proprietary OS door. M$ must have seen this coming. Start making friends. The monopoly days are almost gone. Resolutions are high enough that seeing the difference is negligible. Graphics are at a point where gameplay matters more than ever before. The uniqueness game is going to win the war or join the winners. Google will continue to expand because they partner with everyone. Same with Netflix, twitter, facebook etc.... Software companies need to partner with others to remain relevant. The door of proprietary OS because to surround technology is here and will not stop. Soon the'll find something new to exploit like the touch screen and whatever it is M$ you want to be the one that companies turn to aid in their endeavors. If a M$ employee reads this know that the competition have found their way in especially Apple who's strategy is working like a charm. When an Ipad is legitimately be customizable like a PC to upgrade any facet of it, I can promise you the tech game will change forever. Many hold off on the device because it is what it is. If from the outset I'm told that nvidia and ati have graphic cards that are easily interchangeable and the HD I probably would have bought it if they stated that the OS is easily upgradable from any hotspot or a 3G enabled one from literally anywhere you are.

ZippyZapper2972d ago ShowReplies(1)
BattleAxe2972d ago

Steve Jobs is planning a hostile takeover once Balmer crashes Microsoft's stock into the ground.

T3MPL3TON 2972d ago

@G_o_W_3; correct it mean absolutely nothing. but this is N4G and this has something that sonykids can view as bad for the xbox thus it is posted. You can just avoid utter nonsense such as this.

+ Show (3) more repliesLast reply 2972d ago
gypsygib2973d ago

They're no very smart with there money. Is 500 mill on marketing really worth it.

ComboBreaker2972d ago (Edited 2972d ago )

500 million is worth the laughs.

ThatCanadianGuy2973d ago

I enjoyed reading this news.

Forbidden_Darkness2973d ago

I a kind of sinnester way you mean? ;)

yourfather2973d ago

agree,thats why you only have one bubble

digger182973d ago

I didn't... Even though I've been a Sony Playstation fan for many years, I'm a small shareholder in Microsoft (16k of shares to be exact).

So, not good news for me really

Redrum0592973d ago

you shouldve invested in Sony, lol
jk jk

mrmikew20182973d ago (Edited 2973d ago )

This really is nothing new (those who keeps up on stuff like this), this has been ongoing issue for a while that MS's shareholders wanted them to pull out of the entertainment division. The million dollar question is what is MS going to do?