Microsoft is scheduled to announce its fiscal year 2011 Q4 earnings on Thursday, July 21. We currently have a $27 price estimate for Microsoft, which is very close to the current stock price.
This quarter, we will focus our attention on developments related to Windows, the launch of Office 365, the growth of Bing and Windows Phone 7 and sales of the Xbox 360, Microsoft’s gaming console. Microsoft is facing increasing competition on all these fronts from competitors like Google, Apple and others.
More than 100 Million Office 2010 Licenses sold
Microsoft’s Office division is the biggest contributor to the Trefis price estimate for Microsoft. It accounts for around 30% of Microsoft’s Trefis price estimate of $27.
With more than 100 million licenses of Office 2010 sold, Microsoft currently has more than a 90% share of the productivity software market, which we expect to decline by a few percentage points by the end of our forecast period. [1]
With the launch of Office 365 (See: Microsoft Eyes Upside if Office 365 Takes Off), Microsoft hopes to become the dominant player in the cloud based productivity software market which is currently led by Google. More than 50,000 businesses have signed up for Office 365 since its launch. We should see some concrete numbers in the earnings preview.
More than 400 Million Windows 7 Licenses sold
After the failure of Windows Vista, Windows 7 has been a life saver for Microsoft. It has been the most popular OS yet, after Windows XP, and continues to gain market share. Microsoft has sold more than 400 million Windows 7 licenses to date and expects to sell even more in the coming months. [1] Since Windows accounts for almost 27% of the Trefis price estimate for Microsoft, it is something we look at closely.
[trefischart ticker=MSFT width=350 driver=0614]
Windows 8 is expected to launch in 2012. It will be a unified OS for computers as well as tablets. We can also expect to see some news about that in the earnings preview. Though the growth in computer sales has been declining as consumers migrate to tablets, [2] Microsoft’s foray into tablets with Windows 8 should partially compensate for the loss in growth.
Bing
Bing currently has slightly less than 4% market share worldwide while Yahoo Search which is powered by Bing has close to 6% global market share. While Bing’s combined market share is much lower than Google, it is growing year over year with deals like the partnership with Baidu (See: Microsoft, Baidu Duo Gets Bing into China Though Small Impact to Stock). We expect it to rise to around 5.5% by the end of the Trefis forecast period. Microsoft will definitely shed some light on the prospects of Bing in the coming earnings release.
Xbox
The Xbox 360 with the Kinect addon has been a huge hit and has been the number one selling console in the United States for over an year now. Since it contributes almost 6% to the Trefis price estimate, it should have a marginally positive impact on the stock price. We should see more numbers in the earnings call.
Windows Phone 7
Windows Phone 7, Microsoft’s mobile OS has failed to gain much traction, but Microsoft has had a few major wins in the last few months. Windows Phone 7 with the new Mango update has been proclaimed by reviewers to be one of the best mobile operating systems on the market. It now has more than 25,000 apps in the Marketplace with many new devices in the pipeline.
See our complete analysis for Microsoft
Notes:
- Microsoft: 400 million Windows 7 and 100 million Office 2010 licenses sold, ZDNet, July 11, 2011 [↩] [↩]
- Gartner follows IDC’s PC sales cut forecast, IDC & Gartner quoted by the Guardian, June 10, 2011 [↩]
Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.
Also Read
2 comments