The Microsoft Investor is a daily report from SAI. Sign up here to receive it by email.

MSFT Up With The Market

The market is positive on news that the tax break program will be extended. Shares of MSFT are up slightly, in line with the broader indices. Upcoming catalysts include any entrance into the tablet market (even just as an operating system); Windows Phone 7 adoption; strides against current market leaders in cloud computing; holiday sales of Kinect; and continued upgrade cycles of Office 2010 and Windows 7. The stock currently trades at 8x Enterprise Value / TTM Free Cash Flow, inexpensive compared to historical trading multiples.

Microsoft Benefiting From Strong PC Refresh Cycle (eWeek)

Microsoft is benefiting from a strong corporate PC refresh, particularly in traditional products such as Windows 7 and servers, according Yun Kim at Gleacher & Co. She believes that "Microsoft has been unfairly grouped into so-called PC tech bellwethers that are currently facing growth challenges in the post-PC area.” Microsoft is taking advantage of a "strong corporate PC refresh cycle" and “overall positive trends in the enterprise IT spending environment.” Good news for Mr. Softie. And here I thought everyone was revising PC numbers down. I guess that's already baked into numbers.

Microsoft Is Not Inventing, Needs To Come Up With The Next iPad According To Jim Cramer (Seeking Alpha)

On Jim Cramer's Stop Trading! segment, he says Microsoft's problem is that we don't hear about it winning any battles, taking market share or inventing new products. Microsoft "needs to come up with something we don't have that we all use like an iPad." Apple is always innovating, and Google is moving into many different areas of tech. "Microsoft has not invented anything visible. I'm sure it has done a lot of good things... but you never hear anyone saying, 'Look, I just bought the coolest new Microsoft product you have ever seen.' We need to get excited about these companies." And there you have it.

Microsoft Invests In Software Maker To Take On IBM (The Motley Fool)

Microsoft is upping its ante to corner a share from IBM's mainframe business as it invests an undisclosed amount in French software maker TurboHercules, maker of mainframe applications that can run on non-mainframe systems. The mainframe software market, which is valued at around $25 billion, has been in flux as a number of small companies have pushed anti-trust motion against IBM.

Microsoft To Be A $40 To $50 Stock In A Couple Years (MarketWatch)

Cody Willard at MarketWatch believes shares of Microsoft can hit $40 or even $50 in the next couple years. His rationale? The app revolution, Microsoft's valuation (tens of billions of dollars of deferred revenues) and Xbox Kinect. This would assume that Microsoft enters the tablet market and arguably the smartphone market as well as contributes meaningful revenue from Kinect on more than $60 billion of annual revenue. I'm still a skeptic.