Microsoft just announced the Xbox One game console last week, and the company continues to add new features to its Bing search services. However, a noted financial analyst who has covered Microsoft since the company went public believes it would be better off if it were to sell off one or both of these divisions.
GeekWire reports that in a research note to investors today, Nomura Equity Research analyst Rick Sherlund stated that the Xbox business was not "profitable enough" for Microsoft. He suggested selling off that portion of the company to one that has a bigger consumer electronics focus, such as Samsung, or perhaps spinning it off into its own separate company.
As far as Bing, Sherlund believes Microsoft would be wise to sell that part of the company to either Facebook or Yahoo, companies that already use Bing as the basis for their search engine. Sherlund thinks Microsoft can cut a lot of its operating costs by making this move while also getting" ... a Traffic Acquisition Cost (TAC) back to monetize the traffic that Windows/Internet Explorer or Xbox in the living room can drive to Bing."
Sherlund also thinks Microsoft should expand its Office software to Android and iOS devices, something that has been rumored to be in the works for some time but has yet to materialize. Sherlund states that there are many Android and iOS product owners who will be willing to get access to a version of Office for a monthly fee. Instead, those same users are moving to other productivity software such as Google Docs. He states, "This is bad – Office is being disenfranchised on the hottest growth platforms.”
Source: GeekWire | Images via Microsoft
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