Weekly Tech Notes: Microsoft and Zynga

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It has been a very eventful week for technology companies. There have been some significant developments related to prominent tech giants like Microsoft ( MSFT ) and Zynga ( ZNGA ). Here are some updates which could impact their stock in the near future.

Microsoft

Microsoft is set to announce its quarterly earnings for Q2 FY12 on January 19. We expect a slowdown in Windows sales, and steady growth in Xbox sales, thanks to a jump in sales during the holidays. Microsoft's stock price has risen nearly 7% this week, in anticipation of good results.

There have also rumors that Microsoft may be planning to buy Nokia's smartphone division before CES. There has also been some speculation that Microsoft will launch the next version of the Xbox gaming console - the Xbox 720 - at CES 2012.

Coming to Windows Phone, the Windows Phone Marketplace now offers more than 50,000 apps to customers. While it's still much lower than Apple's App Store or Google's Android Market, it's a significant milestone. We also expect Microsoft to launch new LTE-enabled Windows Phone by Samsung, Nokia and HTC at CES. We also expect the launch of multiple new Ultrabooks by various notebook manufacturers, which should help Windows increase its market share marginally, ahead of the Windows 8 launch in mid-2012.

Check out our complete analysis of Microsoft

Zynga

The other big mover in technology this week has Zynga. Its stock has dipped around 5% this week despite a couple of big launches. Currently, it stands more than 10% below its IPO price of $10.

Zynga's CastleVille has become the second most popular game on Facebook after CityVille, and now has around 37 million monthly active users. However, its growth curve has tapered off and its user base may start declining going forward. Zynga needs to continue churning out new hits to maintain its user and revenue growth rate. This week, it launched two new games - Scramble with Friends on iOS, and Hidden Chronicles on Facebook.

Zynga may also have a very lucrative opportunity to generate additional revenue in the coming years. The Justice Department recently passed a law that would allow online gambling in some states in the U.S. If Zynga enables actual gambling in its flagship game - Zynga Texas HoldEm Poker - by allowing users to play using real money, it could generate a significant amount of revenue from the game.

Check out our complete analysis of Zynga

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: CRM , MSFT , ZNGA

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