Every year, analysts argue about whether or not Microsoft
) should be split up. Stifel Nicolaus is leading the charge this
time around, arguing that the firm needs to divide its key
businesses into separate units. "The time has come for MSFT's
Board to begin serious discussions around splitting the company
into Software (MBD and Server & Tools) and Device (Windows,
Xbox, Phone, Bing, etc.) segments and distributing one to
shareholders on a tax-free basis, as a new publicly traded
entity," Stifel Nicolaus researchers wrote in their report.
"Management preaches about the operational and R&D
synergies from having all these entities together, but we no
longer believe this is true and feel the current structure is
slowing innovation, causing inefficient capital allocation, and
leading to missed revenue opportunities."
While Stifel Nicolaus' concerns are understandable, innovation
has never been stronger at Microsoft. One only needs to look at
to see a glimpse of what Microsoft is developing.
"Additionally, given the diverging margin structures of these
units, especially as MSFT increases its hardware presence, the
true value of the Software business is being obscured," Stifel
Nicolaus added. "We realize this isn't the first time the
break-up of MSFT has been suggested, however, given the
increasingly heterogeneous post PC-centric world the company
operates in, we believe such a move would help ensure the future
viability of each business unit and maximize long-term
Shares of Microsoft are up less than one percent this year.
The company rose more than three percent in 2012.
Windows 8, Microsoft's latest operating system, sold
40 million licenses
in the first 30 days of release. The company has not released any
sales figures beyond the initial period.
Microsoft's next major product could be a game console. The
company is expected to unveil the third Xbox this June at the
2013 Electronic Entertainment Expo. Microsoft is also rumored to
be developing a
handheld game machine
, which may turn out to be an Xbox-themed Surface.
In fact, Surface Pro is already capable of running most
high-end PC games.
found that it could run Portal 2 "at close to max settings." The
$899 starting price
might be a bit too high for the average Xbox owner, but Surface
Pro's capabilities show that Microsoft is already positioning
itself for portable gaming.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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