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Nomura Equity: Should Microsoft (MSFT) sell its Bing and Xbox product line to an outside company?

Should Microsoft sell its Bing and Xbox product line to an outside company? A research report released on Tuesday from Nomura Equity Research reveals interesting details on a profit losing business model.

In its research report, Rick Sherlund discussed how the Bing and Xbox lines of businesses from Microsoft continually lose money for Microsoft and doesn’t produce profits for the multibillion dollar tech company.

Bing and Microsoft Online Services Division A Loss

Microsoft  Latest Earnings Show Losses For Division

In the latest earnings report by Microsoft, the Microsoft Online services division has continually lost money for Microsoft whereas the Server, Windows, and Business Services divisions are accelerating their growth pattens. Microsoft has continually made profits with its Windows Server, Office, and Azure products and earnings report its growth from quarter to quarter.

Xbox Should Be Sold To Samsung?

The report by Rick Sherlund argued that Microsoft should sell the Xbox line of products to Samsung or a company that has a consumer line of products in its sights. The reports argues that Microsoft doesn’t understand the consumer electronics model and that a company like Samsung with its consumer focused line of products and its margins.

Bing Sold To Facebook or Yahoo?

The last part of the report however, is more interesting and points to the Bing and Online services division of Microsoft. With Bing only getting 16.9 percent of the search volume according to latest reports versus Google’s 67 percent, it doesn’t seem to be gaining steam against the giant. In addition, the Bing and Yahoo agreement for search is only a year to year contract and that it should be sold to a company that can integrate it into its line of work and product line. Whether it be Yahoo into its core search and entertainment line of products with Marisa Meyer at the helm, or Facebook with its social and answer generating products that can be merged into the Facebook graph.

Either way, the report on Microsoft and its money losing segments has been long discussed in the tech and investment circles. Whereas Microsoft makes the money in certain divisions, it loses too much in the others. Whether Microsoft will do anything about it through remains unanswered. Investors though want answers as the stock price remains stagnant, but as the Xbox One and other products are unveiled it will show whether or not the divisions can sqeek out profits or not.

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Published: Friday, May 31st, 2013 Last Modified: October 23, 2013

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