Analyst: Microsoft Should Sell Bing And Xbox To Facebook

Bing and Xbox are two of the most popular products from Microsoft, but an analyst has said in a new report that the technology titan would actually be better off without them.

Talking to GeekWire, Rick Sherlund a key analyst at Nomura Equity Research said that by getting rid of Bing, Microsoft could reduce its operating expenses. Facebook could be potentially interested in buying.

“There may be a shift in the wind upcoming for Microsoft, with shareholders potentially demanding a greater say in the direction of the company and how it might be run to drive a better return to shareholders.”

Redmond obviously revealed the Xbox One console recently, and has emphasized multiple times that the Xbox division is set to play a key role in the company’s long term strategy. Sherlund continued:

“Xbox is one of the areas of success for Microsoft and is cool to consumers, but it is perhaps time to assess whether this can ever be material to the overall company and might be more leveragable to a consumer-oriented company such as Samsung.

Shareholders might want to know if they could possibly be better off if Xbox were spun out as a separate company or sold.”

Regardless of what becomes of the Xbox division, Bing on the other hands is a service that Microsoft has invested billions into. Selling it is highly unlikely at this point, not when it still is one of the most popular search engines around. The analyst concludes with some numbers:

“If Microsoft could sell or even give Bing to Facebook or Yahoo and eliminate its operating costs and get a Traffic Acquisition Cost (TAC) back to monetize the traffic that Windows/Internet Explorer or Xbox in the living room can drive to Bing, this might generate perhaps $1.0bn of profit and positive FCF rather than be a drag of a similar magnitude. If this were returned to shareholders, this could add nearly 1% incremental to the dividend yield, in our estimation.”

Sell, or even give you say?

Microsoft has not yet commented on this new report, but there is a strong possibility that the technology titan may indeed make a media statement reiterating its commitment towards making both Bing and Xbox better products than what its competitors offer.

What is your take on this new analysis? Should Microsoft actually try to sell the Bing and Xbox business to one of the other big technology companies? Does it make sense in the long term? Do comment.

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