Nomura Securities analyst Rick Schollen in his report to give Microsoft a buy rating

Source: Internet
Author: User
Keywords Microsoft this year we
Tags business buy rating consoles consumer goods consumer goods market content cost it is

According to foreign media reports, Nomura Securities analyst Rick Schollen (Sherlund) in his report to give Microsoft "buy" rating. However, he believes that Microsoft's latest Xbox One consoles this year 4 million sales target doubt, the equipment this year's gross profit will be negative, the entire Microsoft Xbox business will lose more than 1 billion U.S. dollars this year.

The following is a summary of the Rick Schollen report:

"We had expected the Xbox One to sell around 4.2 million units this December." But given Sony's PS4 price advantage (the PS4 price of $399, Microsoft's Xbox One price of $499), and the competitive pressure on it, and the fact that Xbox-one is currently available in only 13 countries, it is difficult to complete the sales target in less than 6 weeks. Microsoft's Xbox One, which has a Kinect voice and somatosensory device built into it, has a higher price than Sony PS4. We expect Microsoft Xbox One to sell 3 million to 4 million this year. Even if there are 4 million Xbox One demand in the market, it is not clear whether Microsoft will be able to provide so much supply within 6 weeks.

We think that Microsoft's Xbox One this year's gross profit is negative, between 5% to 10%, Xbox360 break-even or small profit, Sony PS4 situation is the same. Microsoft and Sony initially sold their equipment below cost, and over time, the cost of two companies will gradually drop. The increase in production will result in a scale effect and the cost of components will fall. Overall, in terms of sales and marketing, research and management costs, we believe that Microsoft's Xbox entire business unit will lose more than 1 billion dollars this year.

While Microsoft has been able to get nearly 2 billion dollars in royalties from Android phones and tablets, as well as the loss of Nokia's equipment division, we expect Microsoft's entire entertainment and equipment business to lose money this year. ”

Kest Schollen that Microsoft wants to make a difference in the consumer goods market, and it's not enough to rely on the Xbox. "If Microsoft wants to shrink its focus and bring more value to its shareholders, the Xbox business is not the strategy that Microsoft needs," says Kest Schollen. In our view, the ipad or iphone already has a variety of video and music content in the hands of consumers, so the Xbox is unable to consolidate Microsoft's position in the consumer goods market. Can Microsoft's Xbox One bring more traffic to Bing? Maybe, because Bing search in the Xbox can search and surf the internet at the TV entertainment center. Microsoft may want to develop window phones and tablets by extending the Xbox One service and game content. In our view, however, the growth of video games is seen on tablets and smartphones, and music and video content are already widespread on mobile devices. ”

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