seekingalpha.com by Dana Blankenhorn. He makes the point that Microsoft stock “will always be weighed-down by the volume, and outlook, of Microsoft Windows. The business is too big for it to be otherwise.” His idea is simple and (at this point) makes a lot of sense. The Kinect is wildly popular and with the release of the Kinect SDK, developers will be able to start making games and apps for the Kinect. Assuming Microsoft pulls of the launch of the Windows App Store AND assuming the App store will sell Xbox games as well, then developers will be able to sell their games on the app store and make gazzilions of dollars. As the article says:
A tracking stock for Microsoft gaming (I’m sure NASDAQ has the symbol XBOX available), with 20% of its equity, could easily draw 30% of the value of the parent or more, due to its better growth prospects. Plus a PE that would put Google’s (GOOG) to shame. Microsoft’s own PE is currently around 9. People are buying it for the 3.22% yield, while IBM gets a PE of 14 on a yield of 1.65%.Makes sense to me but as usual, I’ll let you have the final say.