Microsoft Is Coming Back

First appeared on CNN Money

Perhaps it's time for Microsoft CEO Steve Ballmer to develop a new monkey boy dance?

Ballmer is set to take the stage at the Consumer Electronics Show in Las Vegas Monday night (for the last time) and he's likely to rave about Microsoft's Xbox and Kinect gaming devices and its upcoming Windows Phone with partner Nokia (NOK).

Cue the Gloria Estefan? (If you haven't seen Ballmer's famous 2001 pep rally speech to developers, please do yourself a favor and click here. It's an amusing 75 seconds.)

Ballmer may finally have plenty of reasons to repeatedly jump up and down again.

While Microsoft's stock has been stuck in the tech version of No Man's Land between value and growth for about a decade, investors have taken a liking to Mister Softee so far in 2012.

Shares of Microsoft (MSFT, Fortune 500) shot up more than 8% last week. The stock is now less than 5% below its 52-week high of $29.46. If the momentum keeps building, it's possible that Microsoft can finally surpass the $30 level that it's flirted with for the past few years but can't seem to crack.

Microsoft still may appeal more to the value crowd than investors craving sexy growth. The stock trades for only about 10 times earnings estimates for this fiscal year -- which ends in July. And earnings per share are only expected to rise 2% this year and 11% in fiscal 2013.

Awesome, unreleased gadgets of CES

There's also that pretty big dividend. Microsoft yields 2.8%, nearly a percentage point higher than a 10-year Treasury if you're keeping score at home.

With $57 billion in cash, Microsoft could easily afford to keep boosting its payout for the foreseeable future.

"The stock is just too cheap and you have the dividend," said Gary Bradshaw, manager of the Hodges Equity Income (HDPEX) fund in Dallas. "It's been a dismal performer but Microsoft has grown earnings over the past few years and there's probably little downside.

The fact that Microsoft has been so unloved for so long could also mean that it may not take much for the stock to move significantly higher. Investors have grown accustomed to new product releases underwhelming the market. A big hit could go a long way.

"People say it's a PC stock and PCs are dead. You can't argue with that," Bradshaw said. "But there's still a lot of growth in emerging markets. And Windows Phone and Windows 8 are coming down the pike. It's got the potential to be a growth stock again."

There is, dare I say it, growing excitement about Windows 8, Microsoft's next operating system. That is currently scheduled to debut sometime later this year.

If early reviews of beta versions of Windows 8 for developers are to be believed, Microsoft may finally have some software that can help it in the rapidly growing tablet market. Apple's (AAPL, Fortune 500) iPad and the many devices running on Google's (GOOG, Fortune 500) Android are early leaders in tablets.

The new four horsemen of tech

But hopes are high for Microsoft's tablet-ready Windows. That's because Microsoft has finally agreed to move beyond its heavy reliance on processor leader Intel (INTC, Fortune 500) and also embrace chips designed by ARM Holdings (ARMH), the U.K. company often referred to as the Intel of mobile semiconductors.

"Yes, it's an old stodgy technology company compared to others but you have plenty of exposure to growth areas like mobile, search cloud and gaming with Microsoft," said Ted Parrish, co-manager or the Henssler Equity Fund (HEQFX) in Kennesaw, Ga. "Rumors of Microsoft's demise are always greatly exaggerated."

Parrish owns the stock in his fund and said that he's hopeful Windows 8 will be as successful as Windows 95 was for Microsoft. That may be tough given the increased competition from Apple and others.

But Parrish owns Apple too. So he is hedging his bets in tech ... which is a pretty smart move for anyone looking to invest in a sector that can often be as unpredictable as Ballmer's dance moves.

Best of StockTwits: Alcoa (AA, Fortune 500) kicks off the earnings parade Monday but there's little excitement. And Bristol-Myers Squibb (BMY, Fortune 500) is buying hepatitis C drug developer Inhibitex (INHX) for a huge premium. That's got biotech investors thrilled.

bradloncar: I've never seen a company post decent earnings just a week after announcing a restructuring. Don't expect $AA to be the first today.

Agreed. In fact, I think earnings overall won't be as strong as many hope. For more about that, check out this column I did last week.

Cash_Cow: $BMY buyout of $INHX will get the funds buying up small cap pharmaceuticals trading at dead lows like $ANX $ARNA $HGSI $ABIO $SQNM $POZN

Investors need to be careful. There could be a feeding frenzy in biotech. (See next tweet) But many small cap drug companies are unprofitable and risky. Hence, they deserve to be trading at their lows.

EXPstocktrader: Roche is probably pissed that $BMY has stepped on a deal that they intended to Buy IMO and we may have a horse race here soon.

The BMY deal, combined with last year's purchase of Pharmasset (VRUS) by Gilead Sciences (GILD, Fortune 500), could mean that Big Pharma will try and buy up the other companies working on hep C treatments. Achillion (ACHN) and Idenix (IDIX) both surged Monday.

jfahmy: Movies, Drugs, and iPads are all up this morning...What else do you need really?

Coffee? Starbucks (SBUX, Fortune 500) and Dunkin' Brands (DNKN) are both down though. Oh well.

Review: Microsoft's New Windows Phone 7: Novel But Lacking

The Wall Street Journal / Walter Mossberg

 

 

Nearly four years after Apple unveiled the iPhone, and more than two years after Google introduced its first Android smartphone, Microsoft is launching its effort to catch up. On Nov. 8, AT&T and T-Mobile will begin selling the first phones powered by the software maker's new Windows Phone 7 operating system.

I've been testing two of these initial Windows Phone 7 phones, the Samsung Focus from AT&T and the HTC HD7 from T-Mobile; each will cost $200. Both are slender phones with large screens and virtual keyboards, though the Samsung is thinner and lighter than the HTC.

Microsoft has imposed tight requirements on the new Windows Phone 7 phones—including fast processors, decent screens and adequate memory. However, in my testing this time, I didn't focus on the hardware. Instead, I bored in on the new Microsoft operating system, set to show up on nine phones this year, including some with physical keyboards.

My conclusion is that Microsoft has used its years in the smartphone wilderness to come up with a user interface that is novel and attractive, that stands out from the Apple and Google approaches, and that works pretty well. Instead of multiple screens filled with small app icons, or the occasional widget, Windows phones use large, dynamic tiles that can give you certain information, like your next appointment, at a glance. And it has special "hubs" for things like contacts and entertainment that use bold, attractive interfaces and offer personalized, updating information.

However, despite having all that time to study its rivals, Microsoft has inexplicably omitted from Windows Phone 7 key features now common, or becoming so, on competitive phones. These missing features include copy and paste, visual voicemail, multitasking of third-party apps, and the ability to do video calling and to use the phone to connect other devices to the Internet. The Android phones and the iPhone handle all these things today.

Plus, because it has waited so long to enter the super-smartphone market, Microsoft is starting way behind in the all-important category of available third-party apps. At launch next month, the company hopes to have about 1,000 apps available for the Windows Phone 7 platform, compared with nearly 100,000 for Android phones and around 300,000 for the iPhone. That means Windows phones will, by definition, be less versatile than their main competitors, at least at launch.

In addition, Microsoft, unlike Apple, has ceded prominent home-screen real estate to the phone makers and carriers so they can push their own apps, like subscription-based TV and navigation services.

To be sure, Windows Phone 7 has a few advantages. These include built-in mobile versions of Microsoft Office (present for years on earlier Microsoft-powered phones) and of its popular Xbox Live gaming service, which also interacts with Xbox game consoles. There is a nice feature that allows the camera to be used quickly, even if the phone is locked. And search works particularly well, including a mode that allows you to enter search commands by voice from any screen. Phone calling also worked just fine, with few failed calls, good voice quality and easy connection to a Bluetooth device I tried.

But I couldn't find a killer innovation that would be likely to make iPhone or Android users envious, except possibly for dedicated Xbox users. Even the built-in Office can be replicated with third-party Office-compatible apps on competing platforms; and the iPhone and Android phones also can interoperate with Microsoft's corporate Exchange email, calendar and contact system.

So for now, I see Windows Phone 7 as mostly getting Microsoft into the game, and replacing the stale, complicated Windows Mobile system that preceded it. It will get better. The company is already working on a copy and paste system, and said it is coming early next year. But, today, I see Windows Phone 7 as inferior to iPhone and Android for most average users. It's simply not fully baked yet.

The main feature of Windows Phone 7 is the Start screen, which takes the form of a long vertical list of tiles that can represent either an app or a hub. The phones lack multiple home screens or traditional folders for grouping apps. These tiles are dynamic: They can show things like rotating photos of friends, or how many unread emails you have.

Microsoft doesn't intend for you to place every app or feature on the Start screen. Instead, some apps, like games, go automatically into one of the special tile hubs, which combine related functions. And all other apps pre-installed or added to your phone go into another long master list you can see by flicking aside the tile view or tapping an arrow.

It's a clean, simple, different approach. But there is a downside. As you "pin" your favorite apps, contacts, photos or Web sites to the Start screen, the list of tiles grows longer, and you have to scroll further and further to reach some. There is no shortcut for getting back to the top of such a list, as there is on the iPhone.

The hubs have a level of social and functional integration seen on some Android phones and on Palm's webOS operating system, now owned by Hewlett-Packard. For instance, in the People hub, you not only see your local contacts, but those synced from Facebook or Microsoft's own Windows Live service. This hub, like the others, borrows the elegant interface from Microsoft's failed Zune music player, so you can flick left and right to see just recent contacts or to see your friends' status updates. But the People hub doesn't have Twitter.

Microsoft sees this combination of tiles and hubs as a "glance and go" interface for quickly seeing important information without opening apps, as on the iPhone. But I was disappointed that more information wasn't presented on the tiles. For instance, unlike in some Android apps and widgets I've used, a stock market tile and a weather tile I downloaded didn't show on their surfaces the latest information.

The calendar, which syncs with Exchange, Windows Live, or Google, can't sync with Yahoo or MobileMe, and lacks a week view. The email program syncs with a variety of services, but lacks a unified inbox, so you have to clutter your Start screen with separate tiles for each account.

Another downside for some users: The phones can be used in horizontal view for photos and Web pages, or for typing email, but some screens, like the Start screen and hubs, are fixed in vertical mode.

Microsoft has done a good job with the Web browser, which I found generally comparable in speed and features to the iPhone and Android browsers. But unlike on some new Android phones, it doesn't support Adobe Flash content.

The built-in Office suite is very nice. It can link to Microsoft's SharePoint corporate online document system. One of its apps, OneNote, also synced in my tests with Microsoft's consumer-focused SkyDrive Web file-storage system. It has a nice feature that makes it easy to jump to sections of long documents, allows for making comments on files, and lets you see presentations broadcast over the Internet.

However, this new mobile Office failed to open a simple Word document I tried. Microsoft says this plain document had some hidden corruption, but it opened on an iPhone and Android, and was editable in their Quickoffice app. Microsoft says it is working on a fix.

Music, video and photos all worked well, and you can use a Zune subscription on the phone. I was easily able to sync media files with a Windows PC using a new version of the Zune software, and I also tried a pre-release version of the new Macintosh Zune software, which is more limited, but also worked properly.

The Microsoft app store, called Marketplace, worked fine, and has a nice try-before-you-buy feature for some apps.

Last but not least is the Xbox Live hub, the center for gaming. It contains games from Microsoft and other developers, and includes your avatar from the Xbox Live service. You can socialize with, and play against, others on the service. For Xbox Live fans, this is mobile heaven.

Overall, I can't recommend Windows Phone 7 as being on a par with iPhone or Android—at least not yet. Unless you're an Xbox Live user, or rely on Microsoft's SharePoint corporate Web-based document system, it isn't as good or as versatile as its rivals.

Ed Baig's first impressions of Windows Phone 7

USA Today

 

You'd be hard pressed to tell that the new Windows Phone 7 devices that Microsoft publicly unveiled Monday come from the same corporate lineage as the Windows Mobile phones of yesteryear. For Microsoft — and Windows Mobile users put off by clunky interfaces and cumbersome menus — the new mobile operating system represents a refreshing change.

The latest handsets boast new designs and a new strategic approach. My initial impressions are mostly positive; a full review will come later.

Microsoft's hardware partners in the U.S. are Dell, HTC, LG and Samsung. AT&T (on Nov. 8) and T-Mobile are the first wireless carriers to offer Windows Phone 7 devices in the U.S., but Sprint and Verizon Wireless devices are to arrive in 2011.

The first devices — the Samsung Focus, HTC Surround and LG Quantum — all will cost $200 with a two-year AT&T contract. T-Mobile and HTC aren't saying what the new HTC HD7 I spent a little time with will cost.

Best I can tell, there's nothing you can do on Windows Phone 7 devices that you can't do on an iPhone, BlackBerry or Google Android device. But Microsoft isn't so much emphasizing third-party apps for Windows Phone 7 as focusing on the experiences that consumers want to do with their phones. (That's probably smart, given how far Windows is behind the iPhone and Android in the apps sweepstakes.)

The Windows Phone 7 screens, which I like, are built around customizable "tiles" and "hubs" that are tied to Web services, and in some cases, some third-party apps. You make hubs come alive by tapping them; no more reliance on styluses.

In the People hub, you can pull in fresh feeds from Facebook and Windows Live. In the Photos hub, you can arrange automatic uploads to Facebook. The Music & Videos hub is closely connected to Microsoft's Zune experience. If you subscribe to Microsoft's Zune Pass service, you can play on the spot any of the thousands of songs that are available in the "cloud."

Business people will likely appreciate the Office hub; you can jot down notes in a mobile version of OneNote, edit and view PowerPoint documents and more. The Games hub makes nice with Xbox Live and some Electronic Arts titles.

The first devices all have snappy Qualcomm processors. Designs vary, but all the phones (at Microsoft's insistence) have the same three buttons below the screen — back, home and search. Bing search and maps play a major role. Microsoft dictated most of the terms, though its partners do have freedom in the apps and features they offer. For example, AT&T is making a version of its U-verse TV platform available on Windows Phone 7 devices. T-Mobile is offering a tile called Family Room, kind of a mini-Facebook with updates and calendar entries for your family.

Microsoft's Windows Phone 7 Series Lacks Cut, Copy, Paste Function

eWeek

Microsoft's Windows Phone 7 Series will lack the ability to cut, copy and paste text, similar to Apple's iPhone, upon that device’s release. In its place, users will be able to perform a single-tap action. The Windows Phone 7 Series will also lack other features upon its release, including Adobe Flash support and the ability to run mobile applications built for Windows Mobile and previous versions of the company's smartphone operating system. Microsoft is working with Adobe, however, to eventually bring Flash support to the devices.

Microsoft’s upcoming Windows Phone 7 Series will not allow users to cut, copy and paste text, adding to a list of other features—including Adobe Flash support—that the company’s newest smartphone operating system will lack when it rolls out to consumers and businesses later in 2010.

"Windows Phone 7 Series will not initially offer copy and paste," a Microsoft spokesperson wrote in an e-mail to eWEEK on March 17. "Instead, we try to solve the most common uses for copy and paste via single-tap action."

For example, the spokesperson continued, "people often want to take an address and view it on a map, highlight a term in the browser and do a search or copy a phone number to make a call. Instead of the user manually doing a copy and paste in these scenarios, we recognize those situations automatically and make them happen with just one touch."

This method, apparently, drew a positive response in early testing, the Microsoft spokesperson added, although the company is apparently prepared to leverage feedback to improve that particular feature set.

The initial devices in the Windows Phone 7 Series may also lack Adobe Flash support, according to Microsoft, although CEO Steve Ballmer assured the audience at a Feb. 15 press conference in Barcelona, Spain, that “we have no objection” to Flash, which is used by many popular Websites to power their rich content.

With no definite timeline announced for Flash support, Microsoft and Adobe have nonetheless been collaborating to integrate Flash Player 10.1 into Internet Explorer Mobile on the Windows Phone 7 Series. Mike Chambers, Adobe’s principal product manager for developer relations for the Flash platform, wrote in a March 9 posting on his personal blog, "I don’t have an ETA or other specifics right now, but it is something that both Adobe and Microsoft are working closely together on."

Integration of Adobe Flash into mobile devices has become an unexpected hot topic of discussion among the tech community in recent weeks, after a January "town hall" meeting at Apple headquarters in which CEO Steve Jobs allegedly suggested that Flash’s buggy nature was the reason it had been excluded from both the iPhone and the upcoming iPad tablet PC. Jobs also insisted that HTML5 would be the Internet’s future for delivering rich content to Websites.

In response, a member of Adobe’s marketing team wrote in a Jan. 27 corporate blog posting, "Without Flash support, iPad users will not be able to access the full range of Web content, including over 70 percent of games and 75 percent of video on the Web."

Apple’s position led a number of companies hoping to compete in the mobile space, including Hewlett-Packard, to emphasize that their own devices will include full Adobe Flash support. "With [our upcoming tablet PC], you’re getting a full Web browsing experience in the palm of your hand. No watered-down Internet, no sacrifices," Phil McKinney, HP’s vice president and chief technology officer for the Personal Systems Group, wrote in a March 8 posting on the company’s Voodoo blog. "A big bonus for [our tablet PC] is that, being based off Windows 7, it offers full Adobe support."

Flash support or no, Windows Phone 7 Series will make a clean break from other technologies as well. During the Mix 2010 conference in Las Vegas, Microsoft executives emphasized that current Windows Mobile applications would not be compatible with the new smartphone operating system.

“We do recognize that there are a lot of folks who have been writing apps for Windows Mobile for some time,” Larry Lieberman, senior product manager for Microsoft’s Mobile Developer Experience, told eWEEK in a March 15 interview. "But we recognize that the landscape has changed, and as we’ve been looking at stuff, we had to drastically change our game, and really the only way to do that was to look at what we were offering and what we could do to address this in a competitive accelerated manner."

Windows Phone 7 Series will utilize Silverlight and XNA to allow developers to build applications and 3D games for the upcoming Windows Phone Marketplace. However, Microsoft has also taken pains to insist over the past few weeks that it intends to continue supporting Windows Mobile 6.5 and Windows Marketplace for Mobile. 

Apple’s iPhone also lacked copy/cut/paste upon its release, although the company later offered that functionality in an update. It had been long requested by many users, particularly those who use their smartphones more in the manner of ultraportable cheap desktops. Given the iPhone’s success before that update, though, it stands to reason that Windows Phone 7 Series lacking copy/cut/paste will not exactly be perceived as the deciding factor in whether the smartphone operating system proves a success.