Remember the other day when we reported that the team who manages Microsoft co-founder’s considerable stock in the company suggested that Microsoft should spin off their Bing search engine and Xbox gaming business? It would seem as though they are not alone in thinking that, and Nomura analyst Rick Sherlund seems to agree with that idea as well, but who is Rick Sherlund and why would his comments be that important? Well Sherlund used to work at Goldman and was acting as point when they took Microsoft public, with some describing him as a long-time friend of Bill Gates, so he might have a bit more clout than your average analyst.
According to Sherlund, he states that Microsoft is currently losing anywhere between $3 billion to $4 billion from both Bing and Xbox combined. While losing money from Bing might be possible, especially given that it would be pretty hard to compete against the likes of Google, the idea of Xbox losing money for Microsoft is hard to believe. In any case he seems to believe that selling or even giving away Bing, or spinning off Xbox or selling the brand would be the best course for the company because as it stands both brands are putting a $0.30-$0.40 drag on Microsoft’s EPS. Sherlund states, “The even bigger issue is that this business does not drive traction in smartphones or tablets and does not contribute to PC demand or enterprise products. They are not strategic and are a costly sideshow.”